Lucy Lazarony

Editorial Disclosure: The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone.

So how does credit get damaged?

Your credit gets damaged in a number of ways.

Over-borrowing.

Borrow beyond your means to repay and you’ll find yourself short of cash when those loan payments come along. Let those payments lapse for a couple of months and you’ve damaged your credit.

Overspending.

Charging up your credit cards, for whatever reason, can damage your credit. Having balances close to the limit will hurt your credit score. Slip behind on your payments and you’ll be facing hefty late fees and a damaged credit record, especially if you fall behind on your payments for a couple months or more.

Paying late on a number of accounts.

If your late payments have spread to multiple accounts, you risk damaging your credit if you are not able to get back on track with payments to your creditors. Multiple late payments are tough to face and can be especially damaging to your credit.

Unexpected life events.

Illness, job loss, an accident with a hefty medical bill can all affect your financial life and your ability to pay your credit commitments as agreed. Falling behind on loan and credit card accounts will damage your credit score.

Bankruptcy.

Filing for bankruptcy can be very damaging to your credit. So if you choose to file bankruptcy to resolve debts be aware that your credit will be impacted for awhile. A bankruptcy can be listed on your credit report for up to 10 years.

Before your credit gets damaged, reach out to lenders about extending payments and lowering minimum amounts. There may be help if you are struggling to make your payment. Reach out, if you can, before you fall behind on a payment. It is a better position to be in and you never know what kind of deal you can work out with the lender. Everyone has the same goal of getting you back on track with your payments. So don’t be shy about reaching out to your lender.

To avoid getting overextended with your credit and falling behind on payments, go easy on the credit that you apply for. Borrow the minimum amount for your needs when you take out a loan. And stay well clear of your credit card limits when you charge on your cards.

If you do have damaged credit, time and positive payment habits will help your credit to heal. Most negative items remain on credit reports for seven years.

So eventually your credit mishap won’t be a factor in your score. And if you’ve had multiple setbacks those will clear eventually as well.

Building up a new positive payment history will help to get your credit back on track. A secured card is a good option for making small purchases and paying them in full each month.

Learn More

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