I was reading an article at msn.com called "New threats to your credit score." It caught my interest because of my blog yesterday. This is evidence that even the smallest late payment and/or late fees charged by a creditor appear on your credit report and can affect your rating and the interest rate a lender will charge you, even without a bankruptcy filing.
In this article, the author had moved from one city on California to another one and the post office was not forwarding her mail properly and it turned out that one of her book boxes was packed with some books from the library from her old city. She didn't get the notice because of the poor mail forwarding and didn't unpack that box for several months. In keeping with recent trends, the library turned the account over to a collection agency that reported the late fees and fines to one of the credit bureaus. The author didn't know about this until she was denied a credit card for the first time in her life and she ordered a credit report.
She took care of the fine and fees immediately upon discovering what happened, but the notation about the fine and late fees remained on her report and her credit score was 50 points lower than the score reported by the other two credit reporting bureaus where this item did not appear.
This article demonstrates that one's credit report and score are affected by delinquent payments and late payments, even without a bankruptcy. Many things can "ruin" your credit rating, not just bankruptcy. For people who can't afford to pay off outstanding debt, concern about "credit rating" should be the farthest thing from their mind. They need to be thinking about the future and how to get out of debt and worry about the credit rating once they've taken care of the debt. In many cases, bankruptcy is the only reasonable option available to get out of debt and if you find yourself with little or no hope of being able to pay your way out of debt, you should look into the bankruptcy solution despite the worries about "credit rating" or "credit score."
http://www.legalhelpers.com/blog/2005/07/lesson-about-credit-ratings.html
