Expert Debt Management
Expert Debt Management
Your Credit:  What Your Past Means

     In the past we were told that the last seven years of our credit history were important, but today this is not necessarily true.  While debts remain on our credit report up to seven years, it is the last 18 to 24 months that lenders really focus in on.  For instance, someone who had perfect credit for the last seven years but then did not for the last 18 months is considered just as big a risk as someone who has had bad credit all along.  The reason for this is that the person is obviously run into difficulty over this period of time and is no longer able to pay their debts in a timely manner or at all.  In fact, someone who cannot pay their bills for the last 18 months is more of a risk than someone who filed for bankruptcy three years ago and has been paying their debts ever since.

     Speaking of bankruptcy, in the past this was the death of your buying power.  While bankruptcy should still be considered the last resort, now it is no longer the black mark that it used to be on a credit report.  If you have filed bankruptcy in this day in age and you have been paying your bills for the last 18 to 36 months you will usually be able to get the credit that you need.

     The reason that bankruptcy is not something that you should take lightly is that once you file you cannot file again for at least seven to 10 years.  You have to make sure that you cannot get out of the spot that you are in now before you file, because things could get worse in the future and bankruptcy will not be an option again.  Then again, if you have had to file for bankruptcy and you maintain a good payment history from then on, you will be a excellent candidate for secured loans such as car loans or even mortgages.

     Did you know that if your credit balances are always over 50% of your limit that you are considered a credit risk?  In fact, you may not be considered as good a candidate as someone who has bankruptcy in their recent past because it shows that you may be over extended and this is considered a risk because if you cannot pay down your current debts why should you be expected to pay down new debts?  Keeping your balances at less than 50% but closer to 30% could increase your credit score by as much as 50 to 80 points, which could be the difference between bad credit and good credit!

     If keeping your balances low is difficult, you may want to think about getting some professional credit counseling.  With the help of a professional you may be able to find areas to cut back or you may be able to consolidate the debt and make it more manageable.  Anyone can improve their current debt by improving on things in the past and the present.

Disclaimer: This site is not , nor should it be taken to be, legal, financial or other professional advice. It merely provides a generalized guidance and generalized information only. Consult a financial advisor or an attorney to discuss any legal or financial issues involved with credit and debt decisions.
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