You work hard to keep your credit report clean. You pay your bills on time, and you work hard to limit your credit use. You do this because you know that lenders zero in on various types of information on your credit report and can, often very easily, say no to your credit card or loan application because of a small detail. For that reason, it’s essential to monitor your credit report and to ensure some of the worst offenders never make it onto your report.
What You Never Want on Your Credit Report
There are some things that you never want to see on your credit report. They are often red flags to lenders who are looking at your ability to repay what you borrow. You may know that things like debt collections and bankruptcies are bad, but what about these?
1. Tax Liens
Tax liens are not just for those who struggle through foreclosure. They can also be a big factor in not paying your taxes on time. In fact, if you don’t pay your utilities, you can face a tax lien on your property. This generally only takes a few missed payments to happen.
2. Multiple Inquiries
You’ve decided you are going to buy a new car, and you’ve talked to your bank, credit union and the car dealership because you want the lowest possible rate available. What you may not know, though, is that each one of these is an inquiry on your credit report. While one is usually no problem, three in a short time can be a red flag to many lenders.
3. Short Sales
You thought it was better than foreclosing on your home, but a short sale is also very damaging to a credit score. Even if it doesn’t drop your score significantly, it’s a red flag to lenders, especially future mortgage lenders.
4. Minimum Payments
Are you just making minimum payments each month? If so, that’s often noted on your credit report and shows lenders you may not be in complete control of your finances may be pushing the limit.
5. Cash Advances
Cash advances are added to your debt balance. That increases the amount you owe, making you a higher risk. Additionally, some cash advance locations pull credit reports in order to determine if they should lend to you. That creates an inquiry on your credit report.
Often, credit card lenders want to provide credit to you, but they need to determine if you are a good credit risk. Not all lenders look at the same things on your credit report. Some put more emphasis on lending to those with a high score, whereas others look at inquiries closer. As a borrower, it pays to work hard to maintain your score and keep your credit card as clear as possible of these potentially bad notifications.