Show Me Your Credit Report and I’ll Tell You the Kind of Borrower You Are
Your credit report is like a window to your financial situation. It can tell so much about how good or bad you are with debts that lenders use it as basis on whether or not to lend you money.
For this reason, it is imperative that you keep your report squeaky clean. Difficult as this may seem, but this can be done. How?
Don’t miss any payments
As a borrower, it’s your responsibility to pay. Although there are times when paying off even just the minimum amount is next to impossible, you should find ways to settle your dues. One miss or two can be forgiven, but not a charge off. When this happens, it will tarnish your credit report in a really bad way. This is because charging-off a debt means you missed payments for around six months and lenders have no choice but to cut their losses. This will definitely reflect badly on your reputation as a borrower.
Ensure your credit account is not sent to collections
Having your account sent to collections will have a negative mark on your credit file that will stay for as long as 7 years or more. You can improve your situation by paying off your dues, so your account will be marked paid rather than unpaid. Although this will have little impact on your credit standing, it will help ease your financial worries and minimize the risk of creditors taking legal action, which will exacerbate the situation.
Keep tax liens off your credit file
Miss any tax payments on your property or income and the tax man will lay claim on them by imposing tax liens. These may come from the IRS, local government, or the state. Similar to sending your accounts to collections, tax liens will stay on your record for 7 years or so. So make sure to pay your taxes on time. If liens are already imposed, pay your debts or make payment arrangements with the tax man.