Clean Up Negative Credit Marks Before Apply for New Credit CardsSeptember 22, 2010 - 9:23 am
When you apply for a credit card, it is important to first know where you stand when it comes to your credit worthiness. Consumers looking to apply for a new card should check their credit scores to ensure they will have the best options and get a good interest rate on a new credit card.
Negative credit histories can hurt your chances of getting a great credit card. You will likely have a higher APR than other customers, that is if you get approved for the card at all. Negative information being reported back from your other creditors to the credit bureaus that track your credit data can affect your credit score for a long time.
How Long Does The Bad Stuff Stay?
In general, negative information will stay on your credit report for seven years. The time starts from the period of time you were late making a payment or from the date the account went into collections. It is not counted from the time you made the last payment. Collection agencies will sometimes keep reporting the account status so it will remain active on your credit report, extending the time the negative account will show on your credit history. This practice is actually illegal and should you notice this happening on your credit report, you’ll need to dispute it to have the credit bureau investigate the situation and correct the information.
Other exceptions to the seven-year rule include:
- A filing for bankruptcy will cause your credit report to retain the negative information for 10 years
- Defaulting on a loan insured or guaranteed by a the US government (ie: student loans), can be reported for seven years after the guarantor takes certain actions
- Any tax liens being reported will stay on record for seven years after being paid in full
- Information reported to the credit bureau involving a job application with a salary of more than $20,000 will have no time limitations for reporting
- Information being reported to the credit bureaus for insurance applications worth more than $50,000 will have no time limitations
- Information being reported to the credit bureaus for credit applications in excess of $50,000 will have no time limitations
- Information being reported to the credit bureaus that deals with a lawsuit or a judgment filed against you can be reported for a period of seven years or until the Statue of Limitations expires, whichever period is longer
To repair your credit history and up your score, you should make the efforts to pay off all outstanding debts as soon as possible and dispute any inaccurate information listed on your credit report. Human error can cause your credit score to drop. Without a good credit history and with a low credit score, it will be more difficult to become approved for a good credit card. You may only be eligible for select credit cards and can lose out on the many options that are available to creditworthy applicants.
Order a free copy of your credit report before filling out an application for a new credit card to reduce the risk of being turned down. Make sure to pay off all new credit card balances full at the end of the billing cycle to boost your current credit score. Credit cards used in the right way can be an effective method for improving your credit history and raising a low credit score.