A collection or charge off entry into one’s credit report is the worst possible scenarios for a debtor. It has a profound impact on one’s credit report. A charge off is usually declared by the original creditor who has decided to give up on collecting the old debt. This usually happens when the debtor has become a chronic defaulter usually for a period of 6 months or more.

Bankruptcy is claimed by an individual or by an organization when they fail to pay back their loans. Bankruptcy can be either voluntary either involuntary. Involuntary bankruptcy is usually filed by the creditors. This is done in order to get a refund towards the credits given by them. Voluntary bankruptcy is filed by the debtor in order to prevent creditors collecting the loan.

Equifax, Experian and Transunion are the three most important credit reporting agencies. It is important that one becomes familiar with reading credit reports issued by any of these 3 agencies. Most of the creditors might ask any of the three credit reports at any point of time in order to sanction loans or any other form of credits.