How adverse credit history affects your score

Adverse credit history can appear on your credit report and potentially harm your credit score. If you find yourself in this position, it may be due to poor credit management. While there are resources that can help you work on your credit behavior, it may also help to understand what adverse credit history is and how it can happen. Let’s break down potential causes for adverse credit, its connection to your credit score and how you can work on building better credit. And if you’re wondering where you stand right now,  check your credit score for free with Chase Credit Journey^®.

What is adverse credit history?

Adverse credit history is a record of neglectful payment history on your credit cards, loans, or other credit accounts. This can show up in several ways.

Past-due or delinquent payments: These late and missed payments can become part of your credit history once your lender reports them to the three major credit bureaus: Experian™, Equifax^® and TransUnion^®. Many lenders offer a grace period before they file this report, but if you repeatedly miss your payment due date, these instances can appear in your credit history and lower your score over time.

Charge-offs: When a lender decides an account is unlikely to be repaid, they note this with a negative filing on your credit history called a charge off. This occurs when a credit account has remained delinquent from lack of payments for a certain time. A charge-off can lower your credit score and may remain on your report for seven years.

Collections: After the lender makes a charge-off on the account, they may sell the debt to a collection agency, which then owns the debt and attempts to collect payment. A collections account shows up on its own on your credit report, negatively affects your score and can tarnish your report for about seven years.

Bankruptcy: This is a legal proceeding someone goes through when debts have gone unpaid and they need a repayment plan. A bankruptcy filing shows up on your credit report and can remain for up to 10 years with a negative impact on your credit score.

You can find out if these factors appear on your credit report with a free credit assessment with Chase Credit Journey. That’s a great first step toward understanding where you stand and just what your adverse credit history might mean for you.

How can I avoid adverse credit?

Best practices for managing personal finances can help you avoid adverse credit. Here are some steps you can take to help maintain or build better credit.

Timely payments can help make a difference in your credit. As they accumulate in your credit history, they help establish a pattern of responsible credit usage and can help raise your credit score over time.

Credit score checks may give you a better idea of where your credit stands so you can work on improving it. There are both hard and soft types of credit checks, which have different levels of impact on your credit score. Luckily, you can check it for free and without harming it with Chase Credit Journey.

Auto payments can help assure you pay your credit bills on time and never miss a payment. Check with your lender to see if auto pay is available for your account.

Talk with your lender if you miss a payment or anticipate some financial difficulty in your future. They may be able to help you find a solution that works for your situation.

Here are some other best practices you can employ to help maintain your credit score:

Using less available credit could serve as an indicator that you are managing your credit well. In credit score calculations often a high credit utilization ratio also impacts your score..

Applying for fewer credit accounts can assist in building better credit. Lenders may perform a hard inquiry on your credit when you apply, and that could have a negative impact on your score.

Tracking habits with credit monitoring may help you improve your habits. Monitoring tools with Chase Credit Journey include alerts, identity monitoring and a monthly summary of your credit habits and score that can let you know of changes to your credit score and what may have caused them.

In summary

Adverse credit history can bring your credit score down. But with best practices like timely payments, and helpful tools like a free credit assessment and monitoring from Chase Credit Journey, you can take steps to improve your credit score over time.