How Quickly Can You Get Rid of Bad Credit on Your Report?

how long does bad credit stay on your credit report

Every transaction we make with money typically has a negative or positive impact on our credit report. And properly managing your credit history is an important part of being financially responsible.

But what happens if you fail to pay a bill on time? How long does bad credit stay on your credit report?

The exact answer depends on the type of negative information. Most negative items will show up in your credit history for about seven years from the last date of activity on that account.

But if you’re looking for a more specific breakdown of how long the most common bad credit items remain in your credit file, here’s what you need to know.

How Long Does Bad Credit Stay on Your Credit Report?

Credit accounts: 7 years

Any negative credit activity will remain on your credit report for at least seven years. This includes activities such as applying for new accounts too quickly or making payments late.

And if you close an account, it will typically remain on your credit report for ten years before dropping off.

The good news though is that positive information can stay on your credit report indefinitely.

Late payments: 7-10 years

Speaking of late payments, these can be reflected in your credit history seven to 10 years from the initial date that the account was due.

Late payments for revolving debt, such as a credit card, can remain on your credit file for seven years.

And late payments for installment debt, like an auto loan, can remain on your report for ten years from the date of last activity.

Likewise, a late payment that is 30 or 60 days overdue is going to have less of an impact on your credit score versus a late payment that is 90 days past due. So the sooner you can pay off that late payment the better.

Bankruptcy: 7-10 years

There are multiple types of bankruptcies that individuals can file. And each of them has various timelines for how long they will show up on a credit report.

Chapter 7, 11, and 12 bankruptcy remain on your credit file for ten years after the filing date. Whereas Chapter 13 bankruptcy is typically removed from an individual’s credit report after seven years. However, it may show up for an additional three years after that time.

Foreclosures: 7 years

A foreclosure can be a pretty negative spot on your credit report for seven years. While it won’t ruin your credit history, it will have a negative impact.

The good news though is that the bad credit effect lessens over time. In fact, according to MyFico.com, if you keep all other accounts in good standing, aside from the foreclosure, your credit score can bounce back in as little as two years.

Collection accounts: 7 years

When an account remains unpaid for more than 180 days it will be turned over to a collection agency for further pursuit of payment. This includes credit accounts, unpaid medical bills, and even auto repossessions.

You might be wondering how long do collections stay on your credit report?

The negative information on a collections account should fall off your credit report after seven years. And, 180 days after the account was first reported to the original creditor.

Once you’ve paid the collection balance, the status of your credit history will be reported as “Paid Collection.” It will also remain on your account for the next seven years.

Credit inquiries: 1-2 years

There are two types of credit inquiries that occur when you apply for new credit: hard inquiries and soft inquiries.

Hard credit inquiries usually occur when a lender reviews your file in an effort to loan you funds. Or, when you open a new credit card with them. The lender will pull your credit report and place a “hard inquiry” on it to receive all of your information as part of the lending process.

A hard inquiry is populated from accounts such as mortgages, auto loans, credit cards, and personal loans. What’s more, a hard inquiry usually remains on your credit file for two years. And, only the first twelve months create the most negative impact.

A soft inquiry, on the other hand, occurs during the process of being pre-approved for a loan or credit card. Or, when someone performs a background check on your credit. This kind of inquiry does not affect your credit score and has no impact.

Public records: 7 years

Other public records, such as court judgments or tax liens against your property, can remain on your credit report for up to seven years.

In some cases, they can even show up for an indefinite amount of time. Unless you put in a request for them to be removed.

Where do you go from here?

Have you checked your credit report recently? If not, you could have bad credit items that are negatively impacting your score.

But if you do, don’t despair. There are steps you can take to eventually improve your credit standing. Your first step is to look at the negative items that are dragging down your credit score and the impact they have on your credit file.

This is why it’s important to regularly check your credit report and make note of any inaccuracies or errors. Then, do what you can to improve your credit by always making payments on time and properly managing your money.

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Published in Credit, Credit Cards, Credit Score, Debt,

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