A credit report is like a financial résumé. It contains information about how you’ve managed your financial obligations, like paying your bills on time and maintaining low balances. It also shows areas where you might need a little improvement. All this information is used to determine your creditworthiness, and it’s the areas for improvement that can cause a host of issues in your financial life. If you’ve overdone it just a bit during the holiday season, you might be wondering how those actions can affect your credit overall. Learn just how long you can expect those dings to your credit to hang around on your credit report.
Negative information can affect your ability to qualify for loans, gain employment or find suitable housing. The good news is that negative information won’t show up on your reports forever. In this way, your mistakes won’t always be with you. Both positive and negative information can remain on your credit reports for varying amounts of time. The most prominent items may linger longer.
Everything from court rulings to late payments can show up on a credit report. Each of these instances can be reported for varying periods of time. On your Experian credit report, information about lawsuits or judgments against you can be reported for seven years, or until the statute of limitations runs out, whichever is longer. Late payments, one of the most common instances of negative information, can be reported for up to seven years. Chapter 13 bankruptcies, collection accounts, and foreclosures can also be reported for seven years. A Chapter 7 bankruptcy, or liquidation, will typically be reported for 10 years, and unpaid tax liens can stay on your credit report indefinitely.
The good news is that even though some of these items can have a significant impact within your credit reports, they won’t linger there forever. The information that’s sampled by a credit scoring model provides a glimpse into how you’re managing your financial obligations at a specific moment in time and in the recent past.
Even though negative items can remain on your reports for several years, you can take steps to maintain a healthy credit profile and offset their impact. One of the best things you can do to offset negative information is to keep your good credit behaviors consistent. When you make payments on time and in the required amounts to keep your accounts current, and if you don’t take on too much debt, you should be on your way to a much brighter financial future.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc., an Experian company. © 2015 ConsumerInfo.com, Inc. All rights reserved.