A lot of people misjudge just how easy it actually is to make mistakes in regards to their credit. The majority of financial blunders that a person makes to their credit is severely detrimental to their future financial outlook and will affect their lives for several years in ways that they typically are not even aware of. The following is an overview of some of the worst kinds of entries that one can have on their credit report.

Charge-offs

If you miss your payments on an account for over 6 months, it could cause the creditor to effectively classify your account as uncollectible. This is when the creditor completely writes off the account and sends an update to the credit bureaus as your account being “charged-off.” A charged-off account remains on a person’s credit report for up to seven years.

Debt Collections

After a certain period of non-payment to your account, the creditor will usually charge it off as well as hire a third-party collections agency to continue the debt collection for them. Now it is important to note that this will not always be reported on your credit report, but usually either the creditor or collection agency will submit a note to the credit bureaus saying that your account is indeed under collection status.

Foreclosure

If a person defaults on the mortgage to their house, their lender will repossess the home and then auction it off in order to try and recover the amount that is owed on the mortgage. This is usually called foreclosure. If your home happens to be foreclosed on, it will have severely damaging effects to your credit. Foreclosures remain on credit reports for a total of seven years.

Bankruptcy

When you file for bankruptcy, it effectively removes all legal liability from you in regards to payment of debts. Depending on the actual kind of bankruptcy that is filed, some or all of your debts may be removed from legal liability. Included in your credit report is each of the individual accounts that were included within your bankruptcy. Although a bankruptcy will remain on your credit report for 10 years,   usually one can start rebuilding their credit when the debt(s) owed have been successfully discharged.

Judgments/Lawsuits

It is entirely possible that certain creditors may take you to court and sue in an attempt to regain their owed money, but of course only if other methods of collection fail to succeed. Now if the lawsuit is proved to be accurate than something called a judgment will be will be entered onto your credit report and remain there for 7 years no matter if you satisfy the judgment or not.

Tax Liens

If someone fails to pay the property taxes on their home or other property, the government has the authority to seize that property and auction it to pay for the unpaid taxes. If this does in fact happen and your home gets foreclosed on because of a tax lien, you are still legally responsible for payment of the mortgage loan. If you do not pay the mortgage, which will also negatively affect your report as well. Paid tax liens remain on a credit report for 10 years, whereas unpaid tax liens remain on the report for 15 years.