Wednesday, June 1, 2011

What hurts your Credit Score and should you care?

The Infographic provided below is helpful, at a glance, in understanding the ways that certain negative events can affect your credit score. This information is most useful for those people who already have good scores, because it tells you what to avoid to keep your score high.

But what if your score is already damaged by missed payments and other issues (foreclosure, debt settlement, etc.)? Should you care about your score?


That answer may surprise you, but in our experience people are more concerned with their credit score than with more immediate present issues. Your credit score is important in that it can affect your ability to obtain loans, mortgages, credit cards, and other financing. But if you are already missing payments on your current debt, then this is not the time to worry about future financing. In other words, your credit score isn't as important as the information on your credit report. Fixing the problems on your report will lead to a good score.

So before you can worry about your score in the future, you must first get your house in order. What we tell our potential clients, in our 1-hour consultation, is that they need to set a realistic budget, whether or not they decide to file for bankruptcy. Even when you have significant debt but believe you can work your way out, you will need a realistic budget to make that happen. Until you can manage your current debt, you should not be worried about borrowing more.

Similarly, if you file for bankruptcy, you need to take steps to make sure you don't end up back in a position where you can't pay your debt. As you would expect bankruptcy is one of the worst things that can happen to your credit score. But if you are in a position to go bankrupt, your score has most likely already been significantly affected by your existing debt.

DISCLAIMER: This infographic is provided by as an advertisement. We have reproduced it here because it contains useful and interesting information, however we do not endorse or claim any knowledge of We recommend that all of our clients and potential clients obtain their credit report as soon as possible. While you may choose to purchase a credit monitoring service (,, etc.), you can obtain your credit report, once every 12 months, at without any cost, trial membership or other enrollment. You also have a right to obtain your credit report directly from each of the three credit bureaus by writing to them directly.

What Hurts Your Credit Score?
[Via: credit score]

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