Sunday, January 29, 2012

Unfavorable Credit History

Unfavorable Credit History

An unfavorable credit history is one that includes information collected and disseminated by any of the three major credit reporting agencies (CRAs)--Equifax, TransUnion and Experian--regarding failure to fulfill credit obligations. CRAs are regulated by the Fair Credit Reporting Act.

Payments

    Late payments or non-payments trigger negative reports, which include the number of accounts past due, how long they have been past due and the amount owed on them.

Balances

    High balances on credit cards--amounts close to your credit limit--can contribute to an unfavorable credit history.

Many Accounts

    Numerous open credit lines may also negatively affect your credit history.

Multiple Applications

    A large number of applications for new credit creates an unfavorable credit history because each application results in an inquiry to the reporting agencies.

Collection Actions

    Attempts to collect delinquent debt are reported to the agencies.

Bankruptcy and Foreclosure

    Bankruptcy--a legally declared inability to repay creditors--and foreclosure--legal proceedings instigated by a creditor to claim property pledged as collateral--will both add to an unfavorable credit history. A bankruptcy remains on your credit report for up to 10 years, while a foreclosure remains for seven.

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