An adverse account is any item that appears on your credit report that is considered derogatory by the lenders that pull your credit for review. Adverse accounts lower your credit score.
Facts
Adverse accounts are categorized as either derogatory accounts, such as unpaid debts, or public records, such as bankruptcies.
Time Frame
Charge offs, collection accounts, foreclosures and judgments can appear within your credit file for 7 years. Bankruptcies, however, can appear on a credit report for up to 10 years.
Considerations
The Fair Credit Reporting Act gives you the right to contest any adverse information that you believe is appearing on your credit report in error and request its immediate removal.
Misconceptions
An adverse account may not appear on all three of your credit reports. Which credit reports reflect the account depends upon the creditor's membership in each credit bureau's reporting program.
Warning
As long as an adverse account appears on your credit report, you will be considered a higher lending risk. This may result in you paying higher interest rates on credit cards and loans.
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