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How long will negative information stay on our credit reports?
How long will negative information stay on our credit reports?
Did you miss a credit card payment, have a bill go to collections, or even had to file bankruptcy recently? If so, your credit score has probably taken a pretty big hit. You’re also probably wondering when it will stop showing up on your credit report so you can move on.
Luckily, negative information that’s reported on your credit doesn’t last forever. In fact, we know the timeline when they will “fall off” and not be reported anymore thanks to the Fair Credit Reporting Improvement Act of 2014, which defines the timelines for how long negative information can remain on your credit file.
Here’s a rundown of how long common items will remain on your credit report, where they very well could be hurting your score:
Credit cards, store cards, retail accounts, auto loans, and other credit accounts that are paid on time can keep reporting on your credit for up to 10 years from the date of last activity.
Late payments for credit accounts
However, if you missed payments or failed to pay on time, that negative data will also be reported, but for a period of 7 years (starting from the exact date the account was first past due.)
Late payments for other debts
While late payments on common credit accounts will show up for 7 years, those same rules don’t apply for revolving or installment loans. In fact, if you have a revolving or installment debt that is now current but does have a late payment some time in the past, that negative item (late payment) will appear on your credit report for 10 years past the date of last activity.
While it may get a little confusing, the late payment history will be removed for these installment and revolving debts after 7 years, but the reporting for accounts that are current will show up for 10 years.
Collection accounts usually will show up on your credit report for a full 7 years after the date the account first became past due. Remember that the date it was past due will be earlier than the date it was sent to collections, which could be 90 days or more after that.
If you’ve been through a chapter 7 bankruptcy (most common for consumers), a chapter 11 bankruptcy, or a non-discharged or dismissed chapter 13 bankruptcy, that will typically keep reporting for 10 years from the date the bankruptcy was first filed (not the date they were discharged).
However, chapter 13 bankruptcies that have been discharged can only stay on your credit report for 7 years from the date they were first filed.
Judgments usually stay on your credit report for 7 years after the date they were filed, whether you have satisfied (paid) them or not.
If you have a tax lien and then pay it off in full, the lien will still report on your credit for 7 years from the day it was satisfied.
However, tax liens that go unpaid (unsatisfied) will stay on your credit report indefinitely – which means that you’re stuck with them until they’re paid off.
When a third-party requests a copy of your credit report (usually a lender, retailer, or employer), that activity shows up on your credit report, and can possibly impact your score. But the good news is that there’s usually not a big hit, and the credit bureaus only keep this on your report for 1 or 2 years.
But there are different types of credit inquiries that might have different reporting timelines. For instance, promotional inquiries (when you received a pre-vetted offer for credit) don’t affect your score and generally remain on your credit for only 12 months. When one of your current creditors performs a review of your account, it also does not affect your score and remains for 12 months. Finally, when you request a copy of your own credit report, it does not affect your score and will remain on your credit file for up to 24 months.
However, there are some slight variations on these timelines depending on state law:
For instance, in California, paid or released tax liens will stay on your credit file for 7 years from the date released, or ten years from the date filed. And unpaid tax liens remain on your credit file for only ten years from the date they were filed – not indefinitely.
New York State residents see their satisfied (paid) judgments only remain on their credit file for 5 years and paid collections only reporting for five years from the date of last activity.
I know – that’s a lot to remember. So we’ve put together this easy list so you can quickly see how long a certain negative item will stay on your credit report:
The item remains two years (or less);
The item remains no more than 7 years:
Released tax liens
Charged off accounts.
Note: the timeline begins from the date of default OR 180 days after the date of the first delinquency that eventually went to collection.
The item remains no more than 10 years:
A Chapter 7 bankruptcy can remain on a credit report for up to 10 years from the date it was first filed.
A Chapter 13 bankruptcy can also remain on a credit report for up to 10 years.
The item will remain indefinitely (until paid):
Federally guaranteed student loans that are unpaid and in default can remain on a credit file indefinitely until such time as they are paid.
Unpaid tax liens may report on a credit file indefinitely.
Remember – there’s another way to get rid of negative items that are reporting on your credit BEFORE they naturally fall off after all of these years! Contact us for more information!
The difference between hard and soft credit inquiries.
Most people check their credit periodically, such as when they’re about to apply for a big loan, once a year, or every four months (like you should). But you may not realize that a whole lot of others are checking your credit – and probably on a more frequent basis. In fact, every time you apply for a credit card, submit an application for a student loan, take out a store discount card, or even apply for insurance or rent a new apartment, your credit is probably being pulled.
Those credit pulls also can ding your credit score, if not handled correctly. Sometimes, that’s inevitable, and other times it’s avoidable. But it’s important to understand the facts about hard and soft credit inquiries, or credit “pulls.”
In fact, only 26% of women and 31% of men know the difference between “hard” and “soft” credit inquires, or credit “pulls.”
So today, we’ll give you some fundamental information about credit inquiries, both hard and soft. Contact Nationwide Credit Clearing if you have further questions about credit pulls, and would like a free copy of your credit report and consultation with a credit expert!
Hard credit pulls:
Hard credit pulls only take place when you apply for new credit accounts.
Or, a hard pull will occur when one of your existing creditors decides to pull your credit. In fact, most creditors can access your credit any time, for any reason they deem, without needing your permission first.
Creditors commonly do this when they’re reviewing your account to consider an increase to your credit line.
Soft credit pulls:
Sofer credit pulls, however, can occur either with inquiries where the consumer voluntarily agreed to have their credit accessed, or other involuntary inquiries.
For instance, soft pulls usually take place when you’re applying for a new job, a cell phone account, trying to rent an apartment, etc.
Effect on credit score:
There is no one set rule for how credit pulls will affect your score. But, typically, hard credit pulls will only have a slightly negative impact on your credit score, possibly dropping your score a few points in the short term.
Typically, your FICO score can go down about 5 points per inquiry if you have your score pulled too much by the wrong vendors. The drop could be greater if you have few accounts or a short credit history without seasoned, positive factors to compensate.
In fact, the negative effect of hard pulls usually last only one year, but most of the damage disappears within the first 90 days.
Are all credit score pulls considered equal?
Since credit scoring is primarily a means of gauging the risk of default, consumers with high credit scores will suffer a little more damage from hard credit pulls. That’s because the credit algorithms consider the fact that they’re getting their credit pulled atypical, and more of a red flag.
So the higher your score to begin, the more damage a hard credit may do.
Additionally, unsecured credit inquiries, like you’ll find with personal credit cards, retail cards, and in-store accounts, will cause the most damage to your score.
When current creditors pull your credit:
We are certain that soft credit pulls have a negligible negative effect on credit scoring – or none at all. That’s the reason why most of your current creditors will only order soft credit pulls on your account, not hard pulls.
Current creditors usually also do a soft pull every month or so, although some check up on their consumers much more frequently.
Some credit pulls always act as hard inquiries, some are always soft injuries, and some can show up as either/or.
Hard pulls are most often found with:
• Applications for new credit cards
• Requests t activate a pre-approved credit offer (such as you receive in the mail)
• Applying for a new cell phone account and contract
Soft pulls are most often found with:
• Background checks by potential employers
• Your bank verifying your identity
• Initial credit checks by credit card companies that want to issue you preapprovals
Who can pull your credit, whether through hard or soft inquiries?
Credit card companies
Financing departments of retail stores
Auto dealerships financing departments
Cell phone companies
Child support agencies
Anyone with “Permissible Purpose,” as deemed by the Federal Credit Reporting Act.
Timing is everything with credit pulls:
Timing is so important when it comes to credit pulls. The more “bad” inquiries that appear on your report within a short time, the bigger hit to your score. For instance, if you apply for five new credit cards within a two-week period, it definitely is seen as risky to the credit bureaus, and your score will drop accordingly.
However, the credit bureaus do account for consumers who want to “shop around” for large and important loans, like mortgages, business loans, etc. Of course, shopping for the best rate on a single loan (not applying for multiple loans at once) means getting your credit score pulled several times within a short period, but the good news is that this practice won’t hurt your credit score.
In fact, the credit bureaus typically just count this group or batch of inquiries as one if they’re within a 30-day period (or a 45-day period with some credit scoring versions).
So, if you’re shopping around for the best rate on an important loan, try to contain all credit pulls to within a 30-day period to keep your score in good order!
Contact Nationwide Credit Clearing if you have further questions about credit pulls, and would like a free copy of your credit report and consultation with a credit expert!
How much will a late payment drop your credit score?
Sometimes, life happens. Maybe you went on vacation and forgot to send off your credit card payment before you left, or you did send it off (you swear!), but it was lost in the mail. Or, you just flat-out didn’t have enough money to pay a bill, so the late notices are piling up.
When that happens, you may be wondering how far your credit score will drop, as the payment becomes 30, 60, and then 90 days later – or more.
The answer is, like so many questions in life, “It depends.” However, we do have some factual information and a few guidelines to go by.
For instance, we do know that paying on time is a major factor in how our credit scores are calculated. In fact, according to FICO, payment history makes up 35% of your credit score.
That being said, there is some gray area when it comes to the credit score damage a late payment can cause.
Here are five factors that help determine just that:
- Was it a 30, 60, or 90-day late payment?
Missing a payment’s due date by 30 days is the first huge milestone that will affect your credit, but continuing to miss that payment by 60 and then 90 days will impact your score even further. Remember that credit reporting is all about gauging risk (for potential lenders and creditors). So while a 30-day late may be explainable as a mistake, oversight, or one-time error, 60 or 90-day lates show that you are really in a financial freefall. Therefore, your score will drop accordingly, so you should definitely avoid a 90-day late payment if you want to save your score.
- How long ago was the late payment?
Credit scoring algorithms also factor in recency – how long ago the late payment took place. So if a 30,60, or 90-day late just hit your credit report this month, your score will drop a lot sharper than if the same late payment occurred five years ago. But that also means that as time goes on (and you continue to make your payments on time) the negative scoring
- Was it just one account with a late payment – or more?
If you’ve only missed a payment with one credit line, loan, or account, it will damage your score a lot less than if you’ve missed payments over multiple accounts.
- What type of credit account did you miss a payment for?
Of course, the credit reporting algorithms give more weight to more important loans, like mortgages, etc. over smaller ones, like a $250 store retail card. Therefore, a 30-day late payment on a mortgage loan will hurt your score a lot more than with smaller and lesser accounts.
- How long have you had that account?
Accounts that are well seasoned – that have been open and in good standing or a long time – will take less of a hit than newer accounts. So, avoid missing payments on that brand new credit card!
- What was your score before the late payment?
Believe it or not, the BETTER your credit was before the late payment, the MORE the late will hurt your score! Are you be punished for having a great score? NO; but the credit bureaus are gauging risk, and a late payment that’s out of character for a high-scorer is more alarming than the same late for someone who commonly makes credit missteps.
A 30-day late on your credit report will probably result in a credit score drop of around 80 points IF your score was originally around 680 or so. But if your score started out at 780 or higher, one late payment could send your score plummeting by 90-110 points!
However, if you’ve missed a payment, there are some ways to do damage control. Immediately contact your creditor and work out a payment, and you can even ask them to delete the negative blemish on your credit if and when you pay.
But different lenders report on different days of the month, so you may get lucky and prevent them from even reporting a 30, 60, or 90-day late. Again, you definitely want to avoid paying 90 days late on any accounts, as that will cause significant damage to your credit – and stay on your report for seven years!
The good news is that Nationwide Credit Clearing is here to help you clean up your credit and improve your score! Contact us if you have any questions about late payments or for a free credit report and consultation!
The 15 most common credit score wrecking balls!
1. Paying late (or not at all)
Of course, one of the biggest wrecking balls that smash through your credit score and finances is paying your bills late. For accounts on your credit report, like mortgages, credit cards, auto and student loans, and many others, paying even just a day or two late can trigger a 30-day late, which will significantly ding your score.
Even worse, being 90 days late causes further damage to your credit report that. Remember that payment history (paying on time every month) is 30% of your score, so pay on time to dodge this wrecking ball!
2. Max out credit cards or accounts
Your credit ratio, or the amount of total debt you hold compared to your available credit, is also a major factor for your score, making up 30% of your FICO as well
So, when you max out your credit cards, even if they are paid on time, your score will get smashed.
3. Have an account charged off and go to collections
Once you are 90 days late with your credit card payment or bill, the next step is typically that your creditor soon charges off the debt, sending it to a third party for collections, causing even more damage to your credit score that can be hard to erase.
4. Cosign for someone who doesn’t pay
Maybe you have a friend or even family member that asks you to be a cosigner on their credit card, auto loan, or another account. I know that you’d like to help, but aware that if they don’t pay, YOU are fully responsible for their debt. In fact, those late payments will show up on your credit report just like you took out the debt, yourself.
5. Filing bankruptcy
If you want to talk about a big, heavy wrecking ball, filing a Chapter 7 or 13 Bankruptcy is one of the most damaging events to someone’s credit score. However, for some people, legal insolvency is still the best option if they are drowning in debt with no way out. The good news is that Nationwide Credit Clearing can work with you during and after the BK process to repair the damage!
6. Foreclosing on your home
Another major wrecking ball is foreclosure, which occurs when you miss enough house payments so the bank legally repossesses the home. Foreclosures cause serious damage to your credit score and will take seven years to fall off your credit report.
7. A judgment against you
This is a dangerous and scary wrecking ball for consumers. When you don’t pay your debt obligations, your lender or third-party collection agencies may take you to court, trying to secure a judgment for the amount you owe (plus late fees, penalties, and court costs). Also, there are state and federal judgments for unpaid child support, alimony, IRS tax liens, etc. that will never disappear from your credit file until they’re satisfied! Contact us immediately if you have judgments!
8. Applying for new credit recklessly
If you start filling out a lot of credit card and loan applications within a short period, it shows the credit bureaus that you’re financially desperate, or something is wrong. Since their main job is indicating risk for lenders, your credit score will take a hit, accordingly.
9. Close old credit cards in good standing
It may seem like good financial sense to cancel old or unused credit cards, but by shutting down a seasoned card or credit line in good standing, you’ve just effectively erased a positive track record of paying on time. Sorry, but your score will go down once that positive payment history is taken out of the equation.
10. Not pay student loans
Remember when we were talking about judgments? Unpaid federal student loans will level your credit very quickly, and they also won’t naturally disappear from your credit report until they’re paid. Unfortunately, unpaid student loans are the fastest growing form of credit score “wrecking ball” in the United States.
11. Utilize payday loans, cash advances, or financing through Rent-a-Centers
All credit is not created equal, and when you take out loans that are deemed risky, it will hurt your score. Payday lenders, check cashing services, certain retail credit cards, and financing purchases like furniture can shake the foundation of your score.
12. Try to outthink the credit card companies with balance transfers
Are you “jumping around” between credit card offers, taking out 0% interest or cash-back offers and moving balances around just to stay one step ahead? The chances are that questionable financial practice will catch up with you sometime, in the form of penalties, late fees, small print you miss, or higher interest rates. But even if it works, your credit score will be battered and bruised.
13. Not using your credit at all
About 30 million Americans are considered “Credit Invisible,” as they don’t have a sufficient – or any – credit history. If you don’t have any credit cards or other accounts, there’s no established payment history for the credit bureaus to judge you by, and your score will be rock-bottom. Luckily, you can contact Nationwide Credit Clearing, and we will guide you through how to establish credit and build a good score.
14. An imbalanced mix of credit
Do you have only credit cards on your credit report? Or, is have you taken out four installment loans but nothing else? An imbalance between credit cards, installment debt, auto or student loans, mortgages, etc. can also act like a demolition crew to your credit score.
15. Not checking your credit frequently
These days, credit and identity theft is the fastest growing form of crime around the world, and companies that collect your sensitive financial data – and even credit bureaus (like Equifax) are susceptible to hackers. Even if you pay all of your bills on time and do everything else correctly, the best way to protect your credit and finances is to regularly monitor your credit report.
Start by contacting Nationwide Credit Clearing for a free credit report and consultation at (773) 862-7700 or MyNationwideCredit.com.
15 Things to stop doing that are making your broke!
Many of us set resolutions every new year, and chief among them is the goal to improve our finances. For some, that may mean saving more; for others, landing a better-paying job; and home ownership is still the American Dream for most families.
But before we can tackle this financial Bucket List and move forward, it’s important that we identity the money mistakes that we’re making that are continuously setting us back. We’ve identified 18 things that are common among the average American consumer, causing them to always be short on money and even hurting their families.
So, if you want 2018 to be the best year yet for your finances, stop doing these 15 things that are making you broke!
- Maxing out credit cards
We’re certainly a nation that loves debt, as we now have more than 1 trillion in credit cards and other revolving debt, an all-time high. Add in mortgages, student loans, car loans and medical debt, etc., and U.S. consumers personally owe more than $12.9 trillion – the GDP of about half the countries in the world!
In fact, the average adult with debt in the U.S. has 8 credit accounts, $16,000 worth of credit card debt alone, and is paying about $430 a month just in minimum payments.
While there’s nothing at all wrong with having credit cards and using them responsibly (you should keep some revolving debt), the problem comes when we max them out – with no plan to pay them off.
Paying only minimum payments means that the average $10,000 balance at 15% interest will take 15 years and about $22,000 to pay off completely.
Maxing out cards also impacts your credit score, since about 30% of your FICO is calculated by the amount of debt you hold compared to your total available credit (called credit utilization.)
So stop maxing out those cards and make more than just the minimum payment this year!
- Not saving
We understand that money is tight and there’s usually more month than paycheck; not the other way around. But one of the principal ways you can ensure that money isn’t always this tight in the future is to start saving. And there’s no better way to put away funds for a rainy day than automatically saving out of every paycheck (or tax refund).
In fact, the majority of Americans couldn’t even come up with $600 today without borrowing or selling something, and sudden financial setbacks like a job loss, medical problem, broken car or other unexpected expense can send about 40% of families into dire financial circumstances.
The best way to combat that – and make sure that you’re always prepared and won’t make even worse short-term financial decisions – is to save a certain percentage of your paycheck automatically, before you even see that money. To resist the temptation to spend it, keep a savings account without an ATM card so it’s not easy to access. You’ll be amazed how it adds up!
- Using payday loans, check cashing, and rip-off credit accounts
Remember how we just mentioned financial emergencies? When the roof leaks, someone gets sick, or the job starts laying people off, those cash crunches often result in people making panicked, short-term financial decisions just to get by. Frequently, those result in cash advances on credit cards, payday loans, using check cashing establishments, applying for a bunch of new credit cards at once, or looking for other personal loans.
The terms and interest rates on these loans can range from incredibly high and expensive all the way to usurious and illegal, and usually put people in a much worse financial situation than when they started.
- Making impulse purchases
Have you ever noticed that retail, department, and grocery stores line the checkout aisles with certain items? They do that on purpose, of course, because they understand that the majority of consumers will make impulse purchases; buying things they don’t need and didn’t plan on purchasing.
Just how much can you save by skipping the magazines, sodas, electronic knick-knacks, and other impulse purchases every month? Furthermore, do you even know how much you’re spending on coffee, lunches, and meals out? It all adds up.
Try this: For one month, carry around a little notepad (or just use your smart phone – there are great apps that help you track every dollar you spend), and write it down every time you spend a dollar. At the end of each week, add it all up according to categories. You’ll probably be shocked how much you’re spending on things you don’t need or necessarily even want – and that money could be going to savings, paying down your credit cards, or other good use.
- Not checking your credit periodically
Did you know that only 1 in 4 people check their credit report annually, and 60% of Americans don’t even know what their credit score is now? Checking your credit report regularly is so important for a host of reasons:
- 25% of credit reports contain errors, inaccurate or duplicate information.
- ID theft and credit fraud now affects nearly 10% of the population every year, and the recent Equifax Hack saw the personal data of about 167 million Americans compromised.
- These days, your credit score is so more important than just getting a mortgage or applying for a new credit card. Getting an apartment, the insurance rates you pay, your utility and cell phone accounts, and even getting a new job may depend on a clean credit report and a good score.
- Not looking into refinancing your mortgage
If you do own your home already, congratulations! While it may be the best investment you’ll ever make, there’s no denying that you’ll be paying it off for a long time (usually 30 years) and for a huge sum of interest – probably more than the original home price! So every smart homeowner should inquire with their mortgage broker if a refinance is available and something that would help them save.
It’s free to talk to your favorite loan officer and get an idea about your options, and lower-interest mortgages or refinancing into a product like a 15-year loan may save you tens (or even hundreds) of thousands of dollars over the years. You may even be able to save money on your monthly payment AND pay the home off faster, but the worst that can happen is that they tell you that you don’t need to make a change.
By the way, the better your credit score, the lower your interest rates and payments will typically be!
- Not reading the fine print
That 0% credit card offer sure looks great, but what will the rate be after that introductory period? Is that great low mortgage payment fixed, or will it go up as other interest rates rise? What are the fees and charges associated with that new student loan or business loan?
Too often, we’re offered new credit that looks like a no-brainer, but comes with some important stipulations that will make it way more expensive in the future.
Nothing is free in this world (except great credit advice from Nationwide Credit Clearing!), so make sure to read the fine print and know exactly what you’re getting into before you sign on the dotted line. Any loan, investment, or other financial vehicle is sure to come with fees, charges, and interest rate details that are crucial to understand. Read all you can but it’s also a good idea to ask questions – and get the answers in writing!
Look for part two of this blog soon, where we’ll cover the next eight things to stop doing if you don’t want to be broke!
How long does information stay on my Credit Report and how can Credit Repair help me?
This is a great topic because it is one of Most Frequently Asked Questions to credit repair companies by those who are trying to improve their overall credit score. The answer is probably not what you are looking for if you are someone who has had significant late payments, judgements, bankruptcy or other
Here’s the Breakdown:
and Although It depends on the type of negative information, here’s the average idea of how long different types of negative information will stay on your credit report:
- Late payments: 7 years
- Bankruptcies: 7 years for completed Chapter 13 bankruptcies and 10 years for Chapter 7 bankruptcies.
- Foreclosures: 7 years
- Collections: Generally, about 7 years, depending on the age of the debt being collected.
- Public Record: Generally 7 years, although unpaid tax liens can remain indefinitely.
Length of Time Matters:
For all of these negative items, the older they are the less impact they are going to have on your FICO® score. For example, a collection that is 4 years old will hurt much less than a collection that is 4 months old.
After that time it will be automatically removed from your report. But 7-10 years is a long time, and that negative information can be standing in the way of you buying a car, a house, or getting a good loan. Public records have a huge impact on your credit report and your credit score as well.
At Nationwide Credit Clearing, we help you get those items removed. There is no reason for those items to remain on your report for 7-10 years.
All positive information on your credit report can stay there forever. The more positive information, the better your credit score will be
It’s time to start learning how to STOP LETTING BAD CREDIT AFFECT YOUR FINANCES. When you sign up with Nationwide Credit Clearing, we take the lead to work on your credit report and dispute unfavorable or inaccurate and outdated information. By doing this it will help save time, energy and frustration. More importantly we help to improve your credit score and ultimately fulfill your dreams… whatever they may be!
Nationwide Credit Clearing offers absolutely FREE – no credit card required – credit reports and consultations. To see your credit score, contact us now.