There Are Some Typical Things That Cause Bad Credit

Category: Finance, Credit.

Sometimes without us knowing it bad credit can ambush us and leave us wondering what happened. All too often people don t know how this turn of events could have happened.

Your credit might be perfectly fine to you one day and then the next you find that it has taken a turn for the worst. People automatically assume that simply paying their bills on time is enough and if they do so they won t encounter any problems. There are some typical things that cause bad credit. When you get down to it, there is much more that needs to be done than people realize. The first is inquiries. The problem is that it takes 30 to 60 days for credit to show up on your report. An inquiry can come from a credit card company, or a mortgage, a utility company company.

What this means is that if you were to apply for five credit cards, and were accepted and issued those cards, the approval would not show up on your credit report for 1 to 2 months. The result could be a skeptical mortgage company who is weary of giving you any more money when they don t know if everyone else in town has already turned you down. Therefore, if in the meantime you wanted to take out a mortgage for a house, the mortgage company would pull your credit, and they would be unable to tell if you were approved for the cards or not. One thing that is very obvious to a majority of people is that bills need to be paid on time. They want their money on the date you agreed to pay them. Creditors don t want to hear excuses, they don t care and they have probably heard every excuse in the book. One thing to keep in mind is a future creditor will look at your credit for the past year in order to see your most recent activity.

A charge off is when you didn t pay a bill, forgot to pay a bill, and it has become obvious to a company that you are never going to pay the bill. Charge offs are another reason for receiving bad credit. The company will write off your incompetence as a loss on their books for their taxes. This mark that is made will stay on your credit report for 7 years, but if the company decides to update the charge for any reason, the 7 years will start over. When a company decides to take this route, it puts a negative mark onto your credit report. Charge offs can be a pestering factor when it comes to ruined credit.

However, most of these things are obvious. There are other things that make a difference on a person s credit. For example, if you come home one day to find that your car has been taken from you, it s safe to say that your credit will be affected. If you owe someone money and you have decided that you are willing to let them take you to court in order to force it out of you, credit is the least of your worries( know that it will be bad) . If you come home to find that your home is now a part of the government s property, chances are that your credit is suffering. Knowledge is power and armed with the proper information can help you in making the right choices when dealing with your credit.

Ignorance is no excuse and it certainly isn t bliss. Being informed will help you to avoid obvious pitfalls. Stay updated on your finances and all the pertinent information.

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