Negative information on your credit report will hurt your credit score and impact how creditors view your applications for loans and other financial products. While it’s possible to recover from negative information on your report, it will eventually be removed from your credit profile. Once that happens, the negative information in question won’t impact your credit score. This guide will reveal when certain items are removed from your credit report.
Understanding Your Credit Report
Your credit report contains important details about your financial health and ability to cover debt. Here are some key details about this document.
The Fair Credit Reporting Act (FCRA) and Your Rights
The Fair Credit Reporting Act prevents anyone from seeing your credit report unless they have a qualifying purpose. For instance, your friend can’t check your credit report, but a creditor can review it before giving you a loan. Credit bureaus like Experian, TransUnion, and Experian are legally required to investigate any disputes and remove inaccurate items from your credit report if they are brought to their attention.
Why Credit Reports Matter
Banks, credit unions, and online lenders look at your credit report before giving out important loans. If you want a mortgage, auto loan, unsecured credit card, or a similar financial product, the lender will likely run a hard credit inquiry. Consumers with good credit and pristine credit reports are more likely to get approved for loans. These same borrowers will end up with better rates and terms than people who have several negative items on their credit reports.
What is Considered as Negative Information?
Negative information varies. Knowing what counts as a negative mark can help you avoid racking up negative marks and address any negative items on your credit report.
Common Types of Negative Information
These are some of the common types of negative information that may appear on a credit report:
- Late payments
- Defaults
- Bankruptcy
- Court judgments
- Foreclosure
- Repossession
- Loan Charge-Offs
- Delinquent loans and credit cards
The Severity of Different Types of Negative Information
Some negative information is more impactful than others. A late payment will hurt your credit score, but you can recover by getting your debt up-to-date and staying on top of future payments. However, it is more difficult to recover from bankruptcy or foreclosure. Lenders may feel less confident doing business with you if you have incurred those negative items on your report. Some lenders will not work with someone for a few years if the borrower goes through bankruptcy or foreclosure.
How Negative Information Affects Your Credit Scores
Negative information will reduce your credit score. Some negative items only trim off a few points, while an event like bankruptcy can reduce your credit score by more than 100 points.
How Long Does Negative Information Stay on Credit Report?
Some negative information stays on your credit score longer than others. Here are the timelines for common negative items that appear on credit reports.
Late Payments
You can remove a late payment right away if you pay it off within 30 days of the original due date. If you miss this deadline, it will stay on your credit report for seven years. Its effect on your credit score diminishes over time, even when it is still on your credit report.
Defaults
Defaults stay on your credit report for seven years from the date of default. The 7-year timer doesn’t start on the date you missed your first payment. A default cannot appear again on your credit report for the same loan.
Bankruptcy
Chapter 13 bankruptcy shows up on a credit report for seven years. A Chapter 7 can stay on a credit report for up to 10 years. Bankruptcy can drag down your credit score and make it hard to climb back up. It’s possible to recover after 1-2 years, but you will have to make every payment on time.
Court Judgments
Court judgments remain on your credit report for seven years. Some court judgments remain on credit reports for more than seven years if it takes longer for the statute of limitations to run out.
Foreclosure
Foreclosures stay on a credit report for seven years. You cannot get this item or any accurate information removed from your credit report sooner.
Repossession
Repossession stays on a credit report for seven years, starting from the first missed loan payment.
Loan Charge-Offs
This negative item stays on credit reports for seven years. The 7-year timer starts with the first missed payment.
Delinquent Loan or Credit Card
This item will stay on a credit report for seven years but has less of an impact on your credit score over time.
Can Negative Credit Reporting Be Removed?
You can only get inaccurate items removed from your credit report. If the missing payment, bankruptcy, foreclosure, or other negative item is accurate, it cannot be removed from the credit report.
Ways to Remove Negative Information on Your Credit Report
These are some of the ways you can remove negative items from your report. Prevention and checking for inaccurate items are vital.
Regularly Checking Your Credit Reports
Reviewing your credit report regularly can help you detect inaccurate information. Checking your report can also help you prevent identity theft. If you see any suspicious accounts, you can take immediate action instead of letting them linger for months.
Developing Healthy Financial Habits
Healthy financial habits can help you make on-time payments and stay in good standing. Consumers incur negative items on their credit reports when they fall behind on payments and become more prone to negative spending habits. Getting the right habits in place can make a difference in your credit report and help you get better loans and credit cards.
Disputing Inaccurate Negative Information
You cannot dispute accurate information. However, any negative item is fair game. You can send a dispute letter with details verifying the negative item is incorrect. You can contact credit bureaus online or mail your letter to their addresses. Most disputes take 30 days to resolve, so if you do not hear back after a month, follow up.
Seeking Help from Experts
Experts can help you file disputes and manage your finances. Some experts are affordable, and there is a lot of free information online. You can also find an accountability group that helps you stay on top of your credit.
Looking to remove negative information on your credit report? Consider reaching out to The Credit Pros. With their personalized solutions and expert guidance, you can take proactive steps towards improving your credit score and achieving financial stability. Contact The Credit Pros today for a free consultation with no obligation to sign up. Call (727) 306-8201 or fill out this form to speak with a credit specialist who can help you remove any negative items on your credit report. With their proven track record of fast and effective results, you can trust that they have the expertise to assist you with all credit matters.
FAQs About Negative Information on Credit Report
Most items can only stay on your credit report for seven years, but it depends on the type of information. Chapter 7 bankruptcy can stay on a report for 10 years. Some lawsuits can also stay on a report for more than seven years if the statute of limitations does not run out by then.
Your credit is usually clear after seven years. A negative item will get removed if it has been on your report for that long. However, if you accrued additional negative items, each of those items needs seven years before getting removed. All of your negative information will not get removed if one negative item gets removed from your credit report.
You can only remove inaccurate information from your credit report. The dispute process can take up to 30 days, and you can follow up if you don’t hear anything back from the credit bureau.
