What’s the Most Damaging Thing on Your Credit Report?

There is no ultimate credit killer. There are all sorts of things you probably never want to see on your credit report, but as far as what may be dragging your credit score down — well, it’s different for everyone.

The Really Bad Stuff

If you’re wondering why you have a low credit score, all the information you need is in your credit report, since that’s what scores are based on. There are a few things that will have an exceptionally depressing effect on your score:

Collections accounts
Charge-offs
Bankruptcy
Repossession
Judgments
Foreclosure
Tax liens

By the time you encounter one of those moments of financial distress, you’ve probably done a fair amount of damage to your credit by the way of missed or late payments and high debt levels. But even those seriously negative items will hurt your credit less as time goes on. Gerri Detweiler, Credit.com’s director of consumer education, said they hurt your credit most in the first year or two after they appear on your credit report. Even when you’re dealing with heavy damage, the best thing you can do is clean up, move on and rebuild.

“You want to stop the bleeding if you still haven’t resolved whatever the issue may be,” Detweiler said. Depending on your situation, you can stop things from getting worse by settling a debt for less than you owe or filing for bankruptcy — when you’ve solved the problem, you can move forward.

“It can be as simple as making sure that everything from here on out is going to be paid on time,” Detweiler said. She also suggested getting additional credit references, like a secured card, as a way to rebuild credit.

Finding Problem Areas

When you look at a credit report, negative accounts will be listed near the top. You can’t miss them — they’ll be labeled by something like “Your accounts that may be considered negative.”

Even if you don’t have a collection account or worse, you’ll be able to find what’s damaging your credit in this area, like accounts with a missed payment or a maxed-out credit card.

Sometimes, really small stuff is holding your credit score back, like a short credit history or having very few accounts. In that case, it’s what isn’t on your credit report that is doing the damage (damage is a relative term here, since a short credit history is in no way comparable to bankruptcy).

If you’re wondering why your credit score isn’t higher, getting your Credit.com Credit Report Card could help you figure it out (and it’s free). This tool gives you a letter grade on the different components of your credit history, and those areas with grades lower than A could use your attention if you want to get the most out of your credit score.

Of course, it also depends if you’re applying for something specific. For instance, if you’re applying for a new credit card, a pattern of late credit card payments is going to be very damaging to your chances of getting the card. If you want an auto loan, any negative history with car payments is going to be a big problem. It helps to stay on top of your credit score because you’ll know which areas of your finances need the most attention in order for you to get the loan products you may need in the future.