Importance Of Credit Scores In Our Life - These days, we hear a lot about improving and repairing our credit scores. Are credit scores such a big deal? How does it affect our financial decisions and our lives? A credit score is calculated and a credit report is made with the help of information gathered from creditors about a person’s financial transactions. The information sent to the credit bureaus is then utilized to create a numerical score. Credit scores are like grades ranging from 300 to 850. If a person has higher “grade”, he/she will get a better credit rating. Good credit scores even help in getting reputed job offers, loans for autos, medical, and housing purposes.
Filing for bankruptcy puts a negative
mark on that person’s credit report. Once entered, this bankruptcy information
will stay on the credit report for up to 10 years. Therefore, it is important that
a person should be aware of this before filing for bankruptcy and find out all alternatives
for addressing a debt situation before taking the extreme step. Filing for
bankruptcy is a significant decision that could have a negative impact on a person
and his credit report for years to come. This would certainly create a very
difficult situation when a person is trying to erase bad credit. Instead, Credit
Restoration is a great option available for people who are experiencing severe
debt problems. The status of a bankrupt person appears as "filed," in
his credit report which means the person is no longer liable for the debts
incurred. Life after bankruptcy filing proves to be very difficult since it’s
virtually impossible to obtain credit, for a home, or get insurance in the near
future.
How Foreclosure Affects Your
Credit Score
A big question that arises in the
mind of any person on the verge of foreclosure, is the effect of the foreclosure
on his credit scores. Yes, there is an adverse effect as some foreclosure
victims have realized that there is a huge drop in their credit score after
foreclosure and they cannot borrow money for several years. Credit score of a
person is based on their entire record of using credit and the entire picture
will be considered in assigning a score. If a person has, paid off his loans on
time, then foreclosure may not have a huge impact on the credit report. It may cause a slight drop
in the overall credit score because plenty of positives cover up one negative
mark.
About the Author
David L. Skinner is the
President/CEO of
Capital Credit Improvement
Group, Inc. David has over fifteen years of consumer credit
related and other relevant industry experience. He has held a number of
executive posts in banks and finance companies, most recently as Senior Vice
President of Credit and Operations with the largest centrally operated mortgage
brokerage in the
United
States.
In those positions, David has been on the front lines of writing,
analyzing, and interpreting credit policy.
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