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.
Bad credit can be a burden for the rest of your life if you let it. Running up large credit card bills or failing to make payments on your loans can damage your credit score and make it difficult to borrow money when you need it.