If you miss a payment, have an old debt sent to a collection agency, or go through bankruptcy, it stays on your credit record for a long time. It does not go away quickly.
It is very important to know how many years these bad marks stay on your report. If you know the timing, you can plan your future better. This way, you will not get a “no” or a bad surprise when you try to get a new credit card or a loan.
Why Do These “Bad” Marks On Your Credit Report Matter?
Your credit report is the most important part of your credit score. If you think bad marks on your report only lower your score, you are wrong. They also make you look “risky” or untrustworhthy to banks, people renting you an apartment, and sometimes even bosses at a new job.
According to experts at the CFPB, one out of every five people has a mistake on their credit report. This means some bad marks might not even be true.
It is important to know these timelines for two main reason. First, you can be patient when the marks are real. Secondly, you can do something to fix them when they are wrong.
How Long Do Negative Items Stay On Your Record?
The Fair Credit Reporting Act (FCRA) is a law that says how long bad marks can stay on your record. Here is a simple list:
|
Negative Item |
How Long It Stays |
|---|---|
|
Late payments (30, 60, 90 days) |
7 years |
|
Collection accounts |
7 years from the first missed payment |
|
Charge-offs (Unpaid debt) |
7 years |
|
Foreclosure (Losing a home) |
7 years |
|
Chapter 13 Bankruptcy |
7 years |
|
Chapter 7 Bankruptcy |
10 years |
|
Unpaid tax liens |
7 years (after you pay them) |
|
Hard inquiries (When you apply for credit) |
2 years |
Most bad marks follow the “7-year rule.” Only bankruptcies usually stay longer.
When Does The Time Start Ticking Before You Can Do Something?
This part is very confusing for many people. The 7-year time does not start when the bank reports it. It starts on the date of first delinquency. This means the very first day you missed a payment that caused the bad mark.
For example, if you miss a credit card payment in January 2020, but the bank sends it to a collection account in August 2020, the 7-year clock starts in January 2020. August does not matter for the clock. This difference is very important.
Some debt collectors try to do “re-aging.” They try to restart the clock to make old debt look like new debt. This is against the law under the FCRA.
How Much Do They Actually Hurt Over Time?
Here is something very good to know: bad marks do not hurt your score the same way for all 7 years. The damage to your score gets smaller as time goes by, even if the mark is still there.
A collection account from six years ago hurts your score much less than a collection from six months ago. Banks and lenders care more about what you do now than what you did a long time ago.
If you make on-time payments every month after a bad mark, you can fix your score a lot. You do not have to wait for the bad mark to disappear to have a better score.
Most bad marks stay on your report for a 7-year shelf life. However, bankruptcies stay longer. But the hurt they do to your score gets smaller over time. This is especially if you show responsible credit behavior from now on.
