Derogatory items on your credit report, such as repossession and foreclosure, missed payments, charge-offs, bankruptcy, inquires, closed accounts, etc., are negative information that stay on your credit report for various lengths of time.
Your credit score is a critical factor that banks and other financial institutions use to decide whether to give you a loan or credit card. While it is important to know the things that help you build a good credit score, you must also know the things that could hurt your credit score.
A good credit score shows that you are a responsible borrower who clears the loan amount on time. A good credit score is important for certain types of loans, including home loans. Borrowers who have missed payments or a lot of outstanding debts have a poor credit score.
Bankruptcy is a legal process which helps a person or business come out of outstanding debts that they can’t pay. The process begins when the debtor files a petition or sometimes, creditors also file a petition.