You definitely don’t want to be delinquent or have your loan in arrears – no matter what the reason.  Once your loan is late it will be “R-rated” and will be posted to your credit bureau.  Below are some R-ratings that we see on credit reports and what you want to avoid.  Please keep in mind that once a rating is posted, regardless of whether it is corrected, paid off, or closed after the fact, the damage is already done.  The R-rating will stay in the history section of your credit bureau for a period of 4 to 6 years before it drops off.  Petty scary…..so be careful.

R1 Score:

Marked on current delinquent account that have been inactive for more than 45 days but less than 90 days.

These liabilities will more to an R9 status if not paid by the 90-day cutoff.

R8 Score:

Notification of repossession; usually used by the automotive industry, and accompanied by vehicle identification numbers, as well as account and personal identification numbers.

R7 Score:

This denotes a payment schedule plan, but is not often used anymore.  Currently Equifax and TransUnion will post alerts to lenders when a credit bureau is requested.  These are referred to in the industry a hawk alerts and raven scores that must be mitigated with an explanation and/or solution, provided in writing with every lending application.

R9 Score:

Delinquent revolving loan or credit facility that has been inactive for more than 90-120 days and has usually been written off by the lender and passed on to a collection agency.  R9s demonstrate a very poor creditworthiness, and whether it is your fault or not, having your loan go to collections forces a new lender to reconsider an approval.

Christine’s Tip:

Once a loan has been written off, it is automatically posted to the credit bureaus, and the delinquent liability will be given an R9 status until it is paid in full.  Some clients believe that if they explain their situation in writing or request the lender not to notify the credit bureau, they can avoid having messages posted to their credit report.  Please believe me when I say this will never happen.  Simply asking a creditor not to report to Equifax of TransUnion is not possible, since this is an automatic process and government mandated.