Your Credit Score More Things to Watch
Fact the average person who deals with credit knows what things can hurt their credit score. It is understood that if you are late on your payments this can have a bad affect on you credit rating. This is a fact that the average consumer can deal with.
Now there is a new threat that can attack your credit score. Some state and local agencies are employing the help of commercial collection agencies to help with their collections. These private collection firms are being used to collect unpaid taxes and in some cases even traffic fines.
A lot of creditors use your credit score as a way to determine if you are a good credit risk. Having a collection on your credit report can do some real damage to your credit rating. So think of what could happen on an oversight by forgetting to pay a ticket.
How much weight this has on your credit report no one can be sure. But rest assured that once a private collection firm has the bill for collection it is quickly reported to the credit bureaus. That being said it will show up on your credit report as a collection, which in turn can drives down your credit score.
There are couple ways that this can affect the average consumer. The lenders can use this as a way to charge more interest for the money you borrow, or they can just flat out deny you for credit. Making this a no win situation for the average consumer.
Another point to be made here is the collection can stay on credit report for up to seven years. If you have a strong credit score this may not affect you as much. On the other hand if your credit history is a little weak this can cause some problems.
Rumor has it that the Fair Isaac Corporation(FICO) is studying if this is a indicator that should be used in their scoring model and how much weight it should have. No one knows how this will turn out or how long this will even be studied. Will the lenders use this to determine if you are a good or bad credit risk? Hopefully not.
Understand that the present system to determine your credit score is okay as far as the lenders are concern. With that being said you are the only one that can protect you credit rating. So be vigilant when it comes to your credit rating, pay your bills on time and pay down that debt and most importantly watch those tickets.
Kevin Peterson has been a tax consultant for more than twenty five years. He has recently in the last five years added credit repair to his service and has helped numerous clients improve their credit rating. Learn valuable information on how to rebuild your credit in time for a home mortgage herehow to rebuild your credit in time for a home mortgage here.