It’s tough to maintain excellent credit, especially when you have a lower income and a multitude of financial obligations. If you talk to people who have ever gotten themselves financially backed into a corner, many of them describe situations where they were forced to choose between a credit card bill or a bill to cover something essential for their survival, such as a power bill.
While many people can empathize with these situations, some describe these claims as excuses — it really depends on who you ask. Whether people get themselves into financial trouble as a result of overspending, financial irresponsibility, financial need, or for whatever reason, the fact remains that whatever happened, happened. All you can do in these situations is move forward.
Because a credit report is like a report card that basically says to lenders “here is how good I am at repaying my financial obligations,” it is something you need to have in order. In spite of any past financial troubles, no matter how severe, you can clean up your credit report with time and a little TLC.
This list contains items you don’t want to have on your credit report. If you have any of these marks on your credit file, it’s a good idea to work towards improving your credit sooner, rather than later. Although these marks generally stay on your credit file for a long time, you can still improve your credit if you focus on paying your obligations on-time from this moment forward.
When you go a long period of time without making a payment on a credit account, the creditor may end up charging-off the debt. This usually occurs after around six missed payments and this simply means that the company does not think they are going to receive payment from you. So, for tax and accounting purposes, they have decided to cut their losses.
This usually does not benefit you, however, with the option of simply avoiding the debt forever. Not only do you generally still owe the debt, you now how a really bad mark on your credit report that you may not be able to get rid of for quite a long time.
In most cases, the best course of action is to pay the debt and also, improve your credit by paying your other obligations as scheduled, keeping your utilization on any other credit cards low, and ensuring you don’t have any charge-offs in the future.