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because of a bad check, this appears on the credit report as 
a collection account. Collection accounts can appear as paid 
or unpaid accounts.  
Any type of collection account, whether paid or not, is 
considered very negative by all credit grantors. Court 
Records Court records include bankruptcies, judgments, 
liens, divorce, satisfied judgments, and satisfied liens. 
All court records, including satisfactions, are considered 
very negative by all credit grantors. Inquiries Every time a 
potential credit grantor looks at your credit file, a credit 
inquiry appears on at least one of your credit bureau 
reports. If the number of inquiries is very few over the 
last two years, then there may be no negative effect on your 
credit worthiness. However, if there are many recent 
inquiries showing on your credit report, credit grantors 
will become nervous and you will probably be denied.  
How Long will Negative Information Stay on my Credit Report? 
The Fair Credit Reporting Act (FCRA) requires that most 
negative credit items be deleted from your credit bureau 
file in no more than seven years, except for bankruptcy 
which can be reported up to ten years. These are the time 
limits for reporting negative credit. The creditor or credit 
bureau can choose to have the negative credit information 
whenever they please. Inquiries remain on the credit report 
for two years.  
How Does Bad Credit Affect a Mortgage? Would you believe 
that it is usually much harder to qualify for a gas card 
than it is to qualify for a home loan? Like many, you may 
have already disqualified yourself from buying a home due to 
bad credit. Little do you know, you may be considered an "A" 
buyer by many brokers and lenders. Even if your bad or 
insufficient credit disqualifies you as an "A" buyer, a home 
loan at standard interest rates may still be within your 
reach.  
Homes are very secure collateral. Because of this, the 
lenders feel more comfortable lending you money against the 
property. As opposed to unsecured credit lines, the lender 
will be primarily interested in your job security, debt to 
income ratio, and ability to pay a reasonable down payment. 
Your credit report will only represent minor role in your 
mortgage approval.  
Can I See My Credit Report? Most credit grantors are not 
allowed by the credit bureaus to show you your own credit 
report. But, you can purchase your credit report from the 
credit bureaus for a fee. Once you receive your credit 
report, you may find that you cannot read it because the 
information is listed in an unfamiliar code. Trans Union and 
Equifax credit reports are very difficult to interpret and 
understand. TRW credit reports, however, are quite easy for 
most people to read.  
How Much Bad Credit Does It Take for Me to be Denied Credit? 
As you may have already experienced, as little as one small 
late pay listing will bring credit denials at every turn. It 
is a myth that a large amount of positive credit can 
outweigh some negative credit. Any negative credit 
whatsoever will become a substantial credit obstacle in 
almost every case.  
Who Looks at My Credit Report? With the passing of each 
year, your credit report is used more and more often as a 
yardstick to measure your character. Prospective collectors 
will always review at least one of your credit reports 
before granting you credit. Today, it is increasingly common 
for insurance companies to review your credit before 
extending auto or health insurance. Many employers now check 
credit before they consider you for a position. If you rent, 
you may have already been through a credit check to 
determine your worthiness as a renter.  
10 Favorite Myths about Bad Credit 
Myth #1 When I pay off a past-due account, such as charge 
off or collection account, it will show "paid" and will no 
longer be negative. It is practically impossible to restore 
your credit without somehow satisfying your outstanding 
debts. However, the act of paying off a debt actually hurts 
your credit. Negative credit is allowed to stay on the 
credit report for a maximum of seven years, except for 
bankruptcy which may remain up to ten years. This seven year 
clock begins ticking on the "date of last activity," or, in 
other words, when the last action took place on the account. 
By paying an outstanding, delinquent debt you will change 
the account status to "paid collection," "paid was late," or 
"paid was charged off"-- which will stand out as a very 
negative listing. Furthermore, you will create a new date of 
last activity on the day you settle the account. The seven 
year clock will reset and begin all over again. When you 
have outstanding debt, it is almost always prudent to seek 
professional aid so that you may settle your debts without 
further damaging your credit (see Should I Use a 
Professional?)  
Myth #2 If I succeed in deleting a negative item, it will 
just come right back on my credit report. The credit bureaus 
have very cleverly spread this myth through the news media 
and even government regulators. In truth, the credit bureaus 
will often temporarily delete a negative listing if they 
haven't heard back from the credit grantor after 
approximately thirty days. If the credit grantor reports in 
tardy, say after six weeks and verifies the negative 
listing, the credit bureau will often reinsert the negative 
listing on the credit report. This is often known as the 
"soft delete." Eventually, though, the creditor simply fails 
to respond to respond and the negative listing is 
permanently deleted. If the item is verified by the credit 
grantor, either before thirty days or after, the account may 
still be challenged again at some future time.  
Myth #3 There are some types of negative listings, such as 
bankruptcies and foreclosures, that are impossible to remove 
from the credit report. There is no type of negative listing 
that hasn't been removed from a credit report a thousand 
times. Some types of negative listings, such as bankruptcy 
or unpaid debts, are certainly more difficult to remove from 
the credit report, but this has more to do with the 
operational systems of the credit bureaus than it has to do 
with the severity of the bad credit item. For example, 
judgments and tax liens are severely negative listings, yet