Your credit reports detail your credit-related activity and the manner in which you handle certain financial obligations, such as credit cards, vehicle loans, personal loans and mortgages. The TransUnion, Equifax and Experian credit bureaus include some demographic information in their records, such as how long you have lived at your current address and how long you have worked for your current employer. Lenders like to see residence and job stability, but they pay the most attention to credit use and account repayment.
Payment Dates
Fair Isaac Corporation (FICO), which produces the credit score most often used by lenders, considers timely debt payment the most important element in calculating your score. Thirty-five percent of your credit score is based on your payment history, according to FICO's consumer information website, and your score goes down every time your payment is late. Lenders who see too many delinquencies on your credit reports may disqualify you from new credit accounts, because it suggests a high probability that you cannot handle another account.
Inquiries
Inquiries are a normal part of your credit records, because lenders review your reports when you apply for new accounts. Too many applications -- and too many resulting inquiries -- within a short time are negative items, because you appear to be desperate to obtain credit, and, statistically, it makes you a higher risk for bankruptcy. The MyFICO website warns that six applications within a few months means a consumer is eight times more likely to file bankruptcy. If you are shopping for the best rates for such things as student loans, mortgages or car loans, submit all your applications within 30 days. The scoring formula recognizes that you are shopping around for one loan and considers all those applications one inquiry for credit score calculation.
Defaults
Lenders often disqualify you from obtaining new accounts if they see defaults on your credit reports. Creditors write off bills if you do not pay for at least 180 days, according to MSN Money columnist Liz Pulliam Weston. Charge-offs show that you ignored your financial responsibilities, which makes other banks and finance companies reluctant to do business with you.
Repossessions
Car loan contracts give finance companies the right to reclaim vehicles from non-paying borrowers, according to the Federal Trade Commission (FTC). A repossession goes on your credit reports, along with the late loan payments that led to seizure of your car. The creditor may also sue you for the difference between your loan balance and the amount of money recouped from selling the vehicle. All those activities are reported to TransUnion, Equifax and Experian and hurt your credit score and your ability to obtain credit.
Legal Actions
Various court actions may disqualify you from getting credit, including judgments for unpaid bills, court orders for wage garnishment, house foreclosures and bankruptcy. Most court actions only stay on your credit reports for seven years, the FTC advises, but bankruptcies stay for an additional three years. Your ability to open accounts is affected most severely during the initial years after judgments, foreclosures and bankruptcy. Lenders may be willing to take a chance on you if you rebuild credit for a year or two with secured credit cards or other accounts available to high-risk borrowers.
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