Most people in New Jersey have at one time or another heard about the importance of the credit score. At least some of those people are not familiar with how a credit score is derived. It may be unclear how different things such as being a late payer or bankruptcy can affect a person’s credit score.
There are a lot of factors that contribute to a person’s credit score. Some of those factors include the type of credit, the amount of debt, and the length of time a person has had credit and whether debts are paid on time. Things such as credit cards, car loans, mortgages and medical bills all contribute to a person’s credit score. Positive information stays on a person’s credit report forever, but luckily, negative information only remains on a credit report for seven years.
Positive information can include consistently making on time payments and paying off debt such as a car loan. Conversely, negative information can include thing such as always being late with payments or not making payments at all on an account. People in New Jersey that are struggling with their finances may already be aware how not being able to pay bills can adversely affect credit.
A bankruptcy will also impact a person’s credit score, but it will also serve as a starting point for rebuilding it. If a person is struggling with his or her debt and is continuously having creditors add negative information to that person’s credit, his or her credit score will continue to drop. Obtaining a fresh start after bankruptcy means that the debts that the court discharged will no longer have an impact on a person’s credit score.
Source: courier-journal.com, “Bad credit score can last long after debt paid off Medical costs biggest problem,” April 25, 2013