What you don't know about your credit report could be hurting you. And we are not talking about identity theft or fraud. We are talking about what's on there. Most people, in fact, are not well informed of how the credit rating system even works. Use this helpful article to find out what could be hurting (or helping) your credit rating, so you can take control of your financial life.
Credit Card Usage Matters
Most lenders want to see under 30 percent usage across the board, according to Balance Track. But they still want there to be some regular usage, too, otherwise why should they loan you money if they can't earn interest on it. Make sure your credit card balances are always below 30 percent across the board to maintain a premium credit rating. If your balances exceed 30 percent of utilization, consider paying them down as soon as possible to avoid being penalized points.
Judgments Can Last 10 Years
Don't ignore collectors. If they are unable to recoup the funds that you owe them, you most often will be sued in a court of law. If you don't win that case, which is usually not likely, the judge issues a judgment against you so the creditor can legally collect. These judgments are public record and never are removed from your credit report. But they only count against your point tally for about ten years, says Bank Rate. They can seriously impact your ability to be approved for credit in the future, and are something that future lenders will consider when determining your creditworthiness and ability to repay.
Foreclosures Don't Count After Three Or Four Years
Most people think that their financial life is over if they have a foreclosure. But that's not the case any longer. In the wake of the toxic mortgage debt fiasco, the federal government changed the laws. Now, after about three or four years from the date of the bank foreclosure have passed, the foreclosure legally drops off your credit report. It is still on there in the public records side, but the points come back and banks can reconsider approving you based on your current status, according to Credit.com. This can result in a serious increase in score, and can mean that you can now get approved for a new home loan.
Hard Inquires Affect Your Credit For 24 Months
If you are pulling to many hard inquiries, you can see a sudden point drop from your credit score. But how long will these inquiries remain on there? According to Credit Karma, 24 months. The good news is that they won't affect your credit after 12 months have passed. So apply sparingly and don't overdo it with credit applications.