bad information on credit report

How Long Bad Information Stays On Your Credit Report

How Long Bad Information Stays On Your Credit Report

Many of us have wondered this before, particularly after we make a mistake or slip in remembering to pay the bills on time. But before we go into the details of how long bad information stays on your credit report, you should be aware of where that “bad information” in your credit report comes from.

This “bad information” is gained from multiple sources. Examples include collection agencies, lenders who have issued your credit, or whatever is included in your public information. All of this information is then reported to the three nationwide credit reporting agencies. These credit reporting agencies put all of this information together and lists it in your credit report. So, credit reporting companies don’t make judgments about the information; they simply reveal what’s being sent to them.

Luckily for you, the Fair Credit Reporting Act (FCRA) limits how long a credit reporting agency can reveal negative items in your report. The following is a breakdown of what kind of bad information is included in your credit report and how long bad information stays on your credit report.

Public Records

There are 3 types of public records that show up on a credit report: bankruptcies, tax liens, and civil judgments. A tax lien usually results from not paying your taxes. A civil judgment is a debt you owe through the courts because of a lawsuit. Judgments generally stay on your credit file for 7 years. This is 7 years from the date filed, whether paid or not. Paid tax liens generally stay on your credit file for 7 years from the date paid. Unpaid tax liens, however, remain on your credit file indefinitely.

Bankruptcies

A bankruptcy is a legal proceeding in which an individual is given relief from paying debts they’re unable to repay. The 2 important forms of bankruptcy are called chapters because they are defined by chapters in bankruptcy law. For Chapter 13 bankruptcy, a person repays at least a partial amount of their debts. Under Chapter 7, a person doesn’t pay any of the debts.

Completed Chapter 13 bankruptcies remain on your credit report for 7 years, and 10 years for Chapter 7 and 11 bankruptcies. If your Chapter 13 bankruptcy was dismissed, it remains on your credit file for 10 years from the date filed. The 10 years starts from the date of the dismissal. Contrary to a completed case, a dismissed case means you didn’t get an order discharging your debts.

Criminal Records

Most criminal records like information on arrests and indictments can be reported until the expiration of the statute of limitations or before seven years, whichever is longer. But criminal convictions may be reported for an indefinite period. An indictment only establishes whether or not there is enough information to charge a suspect with crime. A conviction has to do with an individual who’s been tried and convicted by a judge or jury.

Credit Accounts

Also called trade lines, lenders report on each account you’ve created with them. One of the important things reported is the type of account (whether it’s a bankcard, auto loan, mortgage, etc.). Other reported information include the date you opened the account, your credit or loan amount, account balance, and your payment history.

Late payments remain on your credit report for about 7 years. Accounts with current statuses such as R1 and I1 that show previously late payment history will remain on the credit file for up to 10 years from the date of last activity. R1 means revolving debt on credit cards and home equity lines where the account holder has never missed a payment. I1 is installment debt such as auto or student loan. Only the late payment history is taken out after 7 years.

Collections

Collections refer to the transfer of late or past-due accounts to a collection agency. Amounts are then fully or partially recovered. Collection accounts stay on your credit file for 7 years. The start date begins from when the account first became past due prior to the account being placed in a collection agency.

Foreclosures

A foreclosure basically means that you lost your house due to not paying your mortgage. It’s actually seen by lenders as being something very negative, second only to bankruptcy. A foreclosure on your credit report will remain there for 7 years.

Inquiries

Inquiries occur when you apply for a loan. You’re essentially authorizing your lender to ask a copy of your credit report. These inquiries list everyone who’s accessed your credit report within the last 2 years. The reports includes voluntary inquiries which are  inquiries due to you asking for credit. And it also includes involuntary requests which happen when a lender orders your report for the purposes of pre-approved credit offers in the mail. Involuntary requests do not affect your credit score but will remain on your credit file for 12 months.

Bullet Point Summary Of How Long Bad Information Stays On Your Credit Report

  • Public records like paid tax liens and civil judgment will remain for 7 years. Unpaid tax liens may remain indefinitely.
  • 7 years for completed Chapter 13 bankruptcy. 10 years for dismissed chapter 13 bankruptcy. 10 years for Chapter 7 and 11 bankruptcies.
  • For arrests and indictments, 7 years or if the statute of limitations has expired, whichever is longer. Criminal convictions may be reported indefinitely.
  • Late payment on credit accounts remain for 7 years.
  • Collections stay on for 7 years.
  • Foreclosures stay on for 7 years.
  • Voluntary inquiries stay on for 2 years.

At the end of the day, you should know that the three nationwide credit reporting agencies receive both negative AND positive information. A credit report is obviously not all about negative things in your credit. Items that are also positive or neutral are not only included but may be there indefinitely. Another thing to realize is that the older the negative items, they less of an effect they’ll have on your FICO® score. Further, the type of information channel affects how long bad information stays on your credit report.

Many of us have made financial mistakes in one way or another. Understanding what mistakes you’ve made in the past and how much of an impact it has on your credit will give you a better perspective in rebuilding your credit. If you haven’t checked your credit report recently, why not have a look? Make sure that all your information is correct and accurately shows your personal financial history.

Check out our list of where to get your credit report and credit score for free, to see what’s on your record. If you’d like more information about the credit repair companies that are most effective, you can view our list of the best reputable companies for credit repair.