United Legal Services, LLC

Building A Solid Foundation For The Future

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1. Late Payment

Late payment appears on the credit report when consumer does not make a payment on a loan over 60 days from the due date. One late payment for 30 days can have a bad impact on the credit score even on prime credit reports. Once late payment appears on the credit report it will stay there for 7 years. One recent late payment is much more harmful to credit score than several late payments from the past. Also it is good to understand that there is a difference between late fee and the late payment. Usually financial institutions do not report late payments when it is not 30 calendar day late. They just charge a late fee (refer to your agreements with the banks to understand how much late fee charge could possibly be). Banks report 30,60,90,120 days late in the status of the credit accounts on the credit reports. After 120 days the "late payment account" status could be changed to "charged off account" status.

2.Charge Off

This term is used by the banks, financial institutions. A bank initially considers your debt to be an "asset", but if you fall behind on your payments that "asset" becomes a "liability". So the banks than will "charge off" part or all of your loan from its books. And when that happens a report goes out to the credit reporting agencies and the account shows in the credit history as a charged off account. It will definitely hurt credit score and can remain in your credit report for 7 years. Even when the banks charge off your account you are still liable for the debt.

 3.Collection

In the credit report collection account is considered to be as a negative account. Collection account appears on the credit report for the debt that is not been paid off. Collection accounts could appear on the credit report even for not paid medical bills, student loans, child supports. Anyone you owe money you do not pay can easily transfer your debt to a "Collection Agency" for the future collection activity. And the collection agency can report your collection account to credit reporting agencies and sooner or later you will see the negative collection account mark on the credit report. Sometimes for one negatively reported (charged off) credit card account you might see several collection accounts in your credit file. Once the collection account is in the credit report it can stay in there for up to 7 years. Collection account has a negative impact on the credit score.

 4.Judgement

Civil judgement can be reported on credit report. It usually appears on credit when the creditor sues consumer for the debt. On credit report civil judgement usually shows in the public information section. Civil judgement can stay on credit for 10 years.

5.Tax Lien

 Tax lien appears on the credit report when your taxes are due and no payment is received.Tax Lien can stay on credit for 10 years.

 6.Settled Accounts

It is always a good idea to settle a debt with creditors. The problem is when you do that you have to remember that settled account is also considered to be as a negative account. You might be surprised and disappointed to know this fact. But when you settle the account creditors are allowed to report only the accurate information. Usually in this case they report as settled account (Account paid with less than the original amount owed). Settled account usually remains on the credit file for 7 years.

7.Repossession 

 When you get a car loan always make the payments on time (before the due date). Otherwise your car can be repossessed. Not only you lose your chance to have a car and to use it for your personal or business needs but also the car financial institution reports to the credit reporting agencies that your car loan (installment loan) status needs to be changed to repossessed. It has very bad impact on credit score and that information can remain in your credit report for 7 years.

 8.Foreclosure

It is always hard to know people are loosing their homes to the banks for none payment. That process is called foreclosure. Banks report foreclosed home loan information in to the borrower's credit report within a month. It affects on the credit scores and can stay on credit report for 7 years.

9.Short sale

  Short sale (Real Estate), a sale of real estate in which the proceeds from selling the property is less than the amount owed. It has negative affect on credit report and credit score. Short sale can stay in credit for 7 years.

 10.Child support

  In family law and public policy, child support (or child maintenance) is an ongoing, periodic payment made by a parent for the financial benefit of a child following the end of a marriage or other relationship. Child maintenance is paid directly or indirectly by an obligor to an oblige. It can stay in credit file for 7 years.

11.Bankruptcy

 Bankruptcy is a legal status of a person or other entity that cannot repay the debts it owes to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. Bankruptcy can be reported to credit bureaus and it can stay in credit file for 10 years.