#2.

How Long it Takes for Bad Credit to Fall Off Your Report

CAN YOU REMOVE NEGATIVE ITEMS SOONER VS LATER?

How Long Does Bad Credit Stay On Your Report?

Even the best of us make mistakes, forget payments, and run into financial
emergencies. So, what happens next? More importantly, how long does bad credit
stay on your credit report?
From your monthly utility bills and mortgage payments, to your student loan debt
and personal loans, your financial history follows you through your credit report. It
is vital to ensure you stay on top of your personal finances to keep your record
clean.
Most negative financial transactions will stay on your credit history report for
about seven years. However, the length of time youʼll see the missed payment
actually depends on the type of bill and the reporter.
Below, youʼll find some of the most common bad credit situations. We will tell you
how long you can expect them to stay on your file.
This information can help you understand various factors. Those factors include
when and how your record can be wiped clean.

Open Lines of Credit

Having a student loan or low balance credit card is not necessarily a bad thing.
However, those things still appear on credit reports.
Equifax reports credit accounts in good standing (paid per the terms of your
agreement) are kept on your record for ten years from the last day of activity.
Here is an example. if you have a credit card for six years and then decide to close
it, the credit card will show on your credit history and report for ten years from the
day of closure.
It is important to note what you do with that open account plays a larger role in
lowering your credit score or affecting your credit history. Late payments,
bankruptcies, repossessions, and other derogatory items all add up, regardless.

Late Payments
Life happens, and people make mistakes. One of the most common of these errors
is failing to pay a bill on time in a given month.
The reality is that missing a payment on any kind of debt or bill can cause
significant damage to your credit history. These issues may appear in your credit
history anywhere from seven to ten years from your missed due date.
Revolving debt, such as credit cards or personal lines of credit, can linger on your
credit history for up to seven years. However, installment debt where you pay back
debt incrementally (student loans, car loans, and mortgage loans) can appear for
up to ten years from the last day of activity.
Itʼs not only your credit history that takes a hit when you miss a payment, though.
A good credit score will also be hurt by a failure to pay on time.

According to NerdWallet, neither of the two types of debts are something you
should have lingering around. However, in the case of potential negative outcomes
on a credit report, revolving debt has the biggest impact based on how the two
types of credit are weighted.
Also, your credit score and report also take into consideration how late the
payment is. In most cases, 30 to 60 days overdue will have some impact. However,
that will not be as significant as a payment that is more than 90 days overdue.

Credit Inquires
Whenever you apply for new credit, whether it be a loan or credit card, you go
through a process called “credit inquiry.” In some cases, credit inquiries can have a
negative effect on your credit report.
There are two types of credit inquiries: hard and soft.
Hard inquiries are when you give lenders permission to review your credit history
as a way to show them your borrowing history or your ability to pay. This is a
standard part of the lending process, especially with credit cards or mortgages.
Wherever they originate from, hard inquiries from these lenders show on your
credit file for two years. Luckily, according to CreditKarma, the impact is minimal
with it only lowering your credit score by a point or two for a short period (roughly
a year).
If youʼve received mailers from credit cards or loan agencies saying youʼre pre-
approved, you have experienced a soft inquiry. Soft inquiries include background
checks that a new employer may perform when you start a new job.
Soft inquiries may show on your credit report depending on the agency. However,
unlike hard inquiries, these versions do not affect your credit score.

In Collections
A debt becoming “in collections” usually refers to the original lender transferring
the debt to a third-party administrator in an attempt to recollect some or all of the
money owed. This transfer typically occurs 180 or more days after your last
payment, as explained by Debt.com.
Collections can occur for just about any bill, including medical debt and even
overdue rental fines. The report will be there for seven to ten years from the first
reported late payment (as described above).
In addition, you may see a new record appear indicating that the bill went to a
collections agency. This second listing will take another seven years to be
removed from your history.
If you pay your collections bill, your credit history will reflect the payment. It will
appear as “Paid Collection,” and will continue to appear for seven years.

Public Records
Public records for financial transactions can refer to several different court
judgments. The most common of which, outside of bankruptcies, are tax liens, or
the failure to pay your federal, state, or local taxes.
Tax liens that you have paid appear on your credit report for seven years. Unpaid
tax liens may be there for ten years from the filing.
Another form of public records reported on your credit report are civil judgments
where you owe a debt stemming from a lawsuit. This debt will show on your credit
report for seven years, but companies will also update it when paid in full.

Bankruptcy
Other than tax liens and lawsuit judgments, bankruptcies are another court-related
reason why your credit report and history may be flagged.

There are several different types of bankruptcies which will affect how long this
bad credit stays on your credit report.
For those filing Chapter 7, 11, and 12, this will remain on your report for ten years
starting on the filing day.
Completed, or discharged, Chapter 13 bankruptcies remain for seven years. In
some cases, the bankruptcy may appear for three additional years.
In the case of late payments, the effect bankruptcies have on your credit score
depends on the length of time from your filing date. MyFICO explains that a six-
year-old bankruptcy has less of an impact than a two-month-old bankruptcy.

Foreclosure
Like bankruptcies, having a foreclosure on your credit report can be considered
especially damaging, especially when trying to secure housing or regain control of
your finances.
The length of time a foreclosure can appear on your history is seven years.
Similar to bankruptcies, time will help dampen the impact as long as you continue
to avoid other bad credit moves.

Bad Credit & Your Future

If you suspect you may have missed a payment or requested too many credit cards
in a short period of time, checking your credit report and score is essential.
You should also stay alert for potential credit repair opportunities. For starters,
make sure all bad credit moves past the stated timelines are gone, and ensure
companies are not reporting anything fraudulent (such as an account you did not
open).
By making on-time payments, contacting financial experts for assistance in
managing your money, and reducing the amount of debt and open lines of credit
you have, you may be able to make bad credit a thing of the past.
How are you fighting back against bad credit moves or problems? Share your
strategies in the comments section!