What Is Negative Information?

Negative information is data in a consumer’s credit report that lowers their credit score. Credit reports also contain positive information such as on-time payments and loans that have been repaid in full.

Understanding Negative Information

Negative information includes items such as late payments on loans and credit cards, delinquent accounts, charge-offs, accounts that have been sent to collection, bankruptcies, short sales, deeds in lieu of foreclosure, and foreclosures.

While technically not considered negative information, certain types of inquiries can hurt your credit score. There are two types of inquiries: hard and soft. A hard inquiry is when a lender or other business checks your credit as part of the process of determining whether to approve your request for a loan or credit. Soft inquiries occur when someone reviews your credit as part of a background check, or when you check your own credit. Soft inquiries do not affect your credit score.

A single hard inquiry can lower your credit score, usually by a few points. If you apply for credit numerous times within a short period, this can look bad to potential lenders who may suspect you are overextending yourself.

The Consequences of Negative Information

Negative information will hurt your ability to get the best credit cards and the best loan terms. Too many negative items or even one severely negative item can mean that you won’t qualify for a credit card or loan at all. Negative information will eventually leave your credit report, but the amount of time it takes depends on the item. Foreclosures remain on your credit report for seven years, while completed chapter 7 and chapter 11 bankruptcies stay on your credit report for up to ten years, and chapter 13 bankruptcies stick around for up to seven years. However, having other accounts in good standing will reduce the impact of negative items over time, even before they drop off your credit report.

If your credit report contains negative information that’s false or inaccurate, you should contact the credit bureau and try to get the negative information removed. You might find yourself in this situation if the credit bureau makes a mistake, if one of your lenders or creditors makes a mistake, if your identity is stolen, or if someone else’s account gets mixed up with yours. If your credit report contains negative information that’s a result of financial mistakes or hard times, a combination of positive items and the passage of time will improve your credit score. You also have the option to add a statement of explanation to your credit report that provides information about the circumstances related to that item or incident.

In addition to negative items, certain risk factors can drag down your credit score. If you’ve opened too many new accounts recently, don’t have a mix of different types of credit, have a credit history that is very short, or use a large percentage of your available credit, your score will be lower than it could be if you had a long credit history, no or few new accounts, several different types of credit and a low credit utilization ratio.