What if accurate negative information affects my score?

Credit problems can happen to anyone, especially after a financial setback such as separation, divorce, loss of job, costly medical bills or change in employment. If the account is not paid as agreed, you may suffer an undesirable credit rating. However, you may attach a 100-word statement to your report to explain your circumstances.

The most significant factor is payment history.

Late payments, collection referrals, or legal actions regarding your accounts will likely reflect negatively on your score. Bankruptcy will do the same. Accounts that reflect an unpaid status, such as collection items, judgments or tax liens can affect your credit rating, but paying them off will count in your favor over the long run. As accounts are paid in full, create a personal financial file for receipts and letters of agreement. A receipt or other documentation can be the missing link to clearing up a credit report.

How will I know if I can afford to pay off the bad debt?

Total the unpaid balances from the credit file and set a goal to pay off the balance within a desired time frame. To determine an affordable monthly payment for each obligation, contact the collection agency or the listed company under the inquiries section of the report.

If you are quoted an amount that is more than you can afford to pay, convey your thoughts, and remember to consider your regular monthly consumer debt obligations as you make payment arrangements.