How Long Does Bad Credit Last?

If you’re asking yourself the question being posed in the title of this article, you may have taken a peek at your credit score recently and weren’t comforted by what you saw. If that’s the case, we wouldn’t blame you for wanting to know how long bad credit lasts.

Why is this important? Well, having bad credit can negatively impact you in a few different ways. It can make it harder to buy a car or purchase a home. It can make it harder to qualify for a credit card or get approved for a student loan. Maybe you’re sitting around worried that a collection agency is going to call. Or you just find the idea of committing to habits that’ll build your credit to be stressful and out of reach. Whatever the case may be, it’s clear that having bad credit can affect your life in all sorts of ways.

The reality is that having bad credit doesn’t need to be permanent. While there are things you can do that may have an impact on your credit history, negative information will eventually come off your report. Let’s explore this subject more.

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How Long do Negative Marks Stay on Credit Reports?

To answer the main question being asked right away, generally speaking, a derogatory mark will stay on your credit report for seven years. This is laid out in the Fair Credit Reporting Act (FCRA). Chapter 13 bankruptcy will also stay on your report for seven years while Chapter 7 bankruptcy will linger on your credit report for 10 years.

A person showing a couple their credit score on a phone.

Another important thing to mention is that while it’s not a great sign to have a credit report that’s filled with negative information, older marks generally don’t affect your credit score as much as newer ones.

So, for example, if you make a late payment on your line of credit, it may have a bigger impact in the immediate future than it will a few years down the line. But again, missing a payment or doing anything that affects your credit in a negative way should be avoided if possible, and you should always make your best effort to pay your bills on time.

To round things out, when a hard inquiry is done into your credit history – which is something that may happen when you apply for a personal loan or in certain other situations – this mark will generally come off of your report after two years. It should be noted that a hard inquiry can drop your credit score by a few points.

Will My Credit Score Build Over Time?

To answer this question in general terms, your credit score can be impacted over time, particularly if you’re in the process of rebuilding your credit. To be more specific, it can be impacted when you implement healthy financial habits and as older derogatory marks start to come off your report. Keep in mind that these marks expiring probably won’t do much good to your credit score if you’re handling your finances irresponsibly, or if you’re carrying a ton of debt.

When you’re trying to build your credit, the best thing you can do is to educate yourself in the area of personal finance, get organized, and work hard to become a financially responsible person.

4 Ways to Potentially Impact Your Credit Score

While you may see an impact on your credit score when delinquencies get removed over time, if you want to build your credit, why wait? There are things you can do that may help to jumpstart the process of rebuilding your credit score, and these things should be put into practice as soon as possible.

1. Dispute Errors on Your Credit Report

There’s always room for error, and your credit report is no exception. One thing that you can do to potentially impact your credit history is to check your credit report for errors. There may be a few negative marks hurting your credit score that shouldn’t be there, so it’s a good exercise to check for these.

A person sitting on a couch reading a loan contract.

To do this, you can start by getting a copy of your credit report from one of the three major credit bureaus - Experian, Equifax, or TransUnion. After you’ve gotten a copy of your report, it’s time to go over it with a fine-tooth comb. You’ll want to keep an eye out for any accounts that you didn’t actually open, and you’ll also want to check the information listed under the accounts that you know are yours. This is a good way to make sure you’re not a victim of identity theft.

If applicable, you’ll also want to check that public records like bankruptcy are being listed accurately. If they’re not, you’ll want to take action right away.

If you do spot any errors, you’ll need to get your personal information and documentation in order to have the info you need in hand when you file a dispute. While checking your credit report and going through this entire process can be lengthy, it’s an important habit to keep up with to make sure your credit score isn’t being needlessly harmed.

2. Keep Track of Your Bills and Pay Them on Time

When it comes to the factors that make up your credit score, payment history is the biggest piece of the puzzle. It makes up 35% of your FICO score, which is the most commonly used scoring models. Paying your bills on time may make a big impact on your credit score when your payments are being reported to a credit bureau. Even in cases where on-time payments aren’t being reported, missing payments may still get reported.

3. Pay Your Debts

Another important thing to work towards if you’re trying to impact your credit score is to do your best to pay off your debt.

Why? Well, another important facet of your financial profile that makes up your credit score is your credit utilization ratio. This is a number that expresses how much credit you’re using on your revolving credit accounts, like your credit cards and lines of credit, and compares it to the total amount of available credit you have across all these accounts. The lower the number (expressed as a percentage), the better. So, by paying off your debt, you may have an impact on your credit history.

Click here to learn more about the differences between lines of credit and credit cards!

4. Consider a Rent Reporting Company

Unlike most of your credit accounts, the payments you make for your rent generally don’t get reported to credit bureaus. Having said that, you may still be able to impact your credit history by paying your rent on time. To do this, you’ll need to use a rent reporting company. These organizations will report your rent payments to major credit bureaus, but just remember that they may or may not use this information when coming up with your credit score.

A picture containing sky, outdoor, house, residential.

These companies will typically make you pay a sign-up fee and you’ll likely need to pay a monthly fee as well. While it may not be conventional, this strategy may help you impact your credit score.

Be Financially Responsible to Impact Your Credit Score

If you’ve ended up with bad credit for whatever reason, you might be having a hard time getting qualified for personal loans, or at least finding ones with lower rates. While the negative information on your credit report will eventually start to drop off, just remember that simply waiting it out won’t do you much good in the end.

If your aim is to start rebuilding your credit, you’ll need to get proactive. This means paying all your bills on time, paying off debt, and keeping up with good financial habits. With patience and hard work, you may be able to start impacting your credit score!

Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see CreditFresh’s Terms of Use.

Posted in: Credit Score