It’s a terrible feeling to see a negative item on your credit report. It can drag down your credit score as well as your self-esteem.
But take solace in knowing that there’s a light at the end of this tunnel. Whether you have a collection account or a bankruptcy, it eventually falls off your report.
So, let’s take a look at how long some of the more common mistakes stay on your credit report.
This isn’t really a mistake in the way a collection account is, but I’m including it here because it does have a negative impact on your score. When you apply for credit, the lender reviews your credit report in detail, and that’s called a hard inquiry.
A hard inquiry takes about two to five points off your score. That’s for each inquiry. But most credit scores give you a break if you’re shopping for a mortgage and there are several inquiries within a short period.
Credit scores are set up to recognize that you’re rate shopping and to count it as one inquiry. But if you apply for, say, five credit cards over a month, that’s five different hard inquiries. You’re looking at 10 to 25 points off your score.
Inquiries stay on your report for up to two years. But after the first year, there’s less impact on your score.
A late payment stays on your credit report for seven years. Here’s where it really hurts: Even after you pay the past-due bill, it remains on your report for seven years starting from the original date of delinquency.
For example, if you had a late payment in June 2018, the late payment drops off your credit report in June 2025. Your payment history is a whopping 35 percent of your FICO score. One 30-day late payment could make an excellent FICO score go down by 100 points or so.
Don’t let this happen to you. Set up reminders via email or text messages so you don’t miss the due date.
If you get behind, pay your bill as soon as you can. If you don’t, your account could be sold to a collections agency.
When your creditor gives up on you, usually after you’re at least 120 days late, your account might be sold to a collections agency. The agency then reports the collection account to the credit bureaus.
Collection accounts can stem from a variety of things, not just from credit cards. It could be a medical bill you didn’t pay because you were waiting on insurance to come through. Or maybe you just didn’t have the money. Even a long-overdue utility bill could wind up on your credit report if you aren’t careful.
Here’s the basic answer: A collection account stays on your report for approximately seven years and six months. The timeline starts on the original delinquency date, which is the first day after you missed a payment and never got your account up to date. The extra six-month period is because the debt is usually six months old when it’s sold to a debt collector.
Unfortunately, you’ll also see the charged-off account from your original creditor on your credit report, too. So, that’s two negative items on your report.
If you pay off the account during the 7½-year period, it still remains on your report. But the impact on your credit score might not be as bad. For example, a collection account has much more impact on your score in the first two years than it does during the remaining five years. The further you get away from the mistake, the more your score will bounce back.
One of the newer scores, FICO Score 9, doesn’t include paid collection accounts. And medical collections are also less emphasized than other types of accounts. But whether or not it helps your score depends on the version of the score that’s used when a lender requests your score. And FICO Score 9 isn’t widely used yet.
Another recent addition, the VantageScore 4.0, doesn’t include medical collection accounts less than six months old. But it isn’t widely used yet, either.
So, if you pay off the debt, it might still be a factor in your credit score, depending on the score that’s used. Even though it’s still on your credit report, a collection account that’s listed as paid looks better to a potential lender.
The length of time a bankruptcy stays on your credit report depends on the type of bankruptcy. A Chapter 7 bankruptcy stays on your report for 10 years. And a Chapter 13 bankruptcy stays on your report for seven years.
Chapter 7 bankruptcies stay longer because most of your unsecured debt is discharged. With a Chapter 13 bankruptcy, you’re still paying on your debt, and a portion is discharged. So, the penalty for a Chapter 13 bankruptcy is lighter.
After the first two years, your bankruptcy will have less impact on your score. Your score will drop like a rock at first, but be patient and you and your credit score will recover from it.
Other Negative Items
Other negative items like foreclosures and repossessions stay on your report for seven years.
Foreclosures occur when you are past due on your mortgage by 60 to 90 days. You’ll receive a default notice in the mail. Take this very seriously, because you could lose your home. Likewise, your car could be repossessed if you fall behind on payments.
Civil judgments and tax liens used to appear on your credit report as public records, but the credit bureaus no longer list them.
Your Credit Score Will Get Better
I know it feels awful to have these mistakes on your credit report. But this is one of those times when you just have to wait it out for two years. After that, your score will start to improve.
Now, during that time, you must be totally responsible with your other bills, too, or your score might even get worse. As mentioned, payment history is super important for just about all versions of credit scores. It’s the very basis for having good credit, after all.
You also need to check your free annual credit reports regularly and make sure all the items are listed accurately. Know when the negative items should come off your report. If they still show up, you can dispute this as an error.
OK, you messed up, but it’s time to move on. Do a good job with your finances from this point forward, and you’ll end up in a good place even before these mistakes fall off your credit report.