How Long Do Negative Marks Stay on Your Credit Report?

While building and maintaining a great credit score should always be a priority, mistakes happen. Some mishaps are more severe than others and can impact your credit rating for much longer. Understanding which items carry more weight on your score will help you avoid them in the future.

What Can Cause a Negative Mark on My Credit Report?

Not all negative marks have the same consequences. Some may have only a minor and temporary effect. Here are four common items that can negatively impact your credit score.

Late or Missed Payments

Your payment history has the most significant impact on your credit – making up 35% of your score. As a result, you should always work to pay your bills and make your loan payments on time.

How Long Will it Affect My Credit? Late or missed payments can remain on your credit report for up to 7 years.

How Can I Prevent it? Avoid missing payments by setting reminders for bills and loan payments or set them up to be automatically paid.

Credit Inquiries

A credit inquiry is when a company checks your credit report and/or score. There are two types of inquiries – soft and hard.

• Soft inquiries are inquiries commonly used by financial institutions when sending you pre-approved offers. Other examples include background checks for employment or when you apply to rent an apartment. Soft inquiries do not affect your credit score and should not show up on your report. 

• Hard inquiries are when you apply for a loan and give a lender authorization to pull your credit. Hard inquiries do impact your credit score and will show up on your credit report.

How Long Will it Affect My Credit? Each hard inquiry can remain on your credit report for up to 2 years.

How Can I Prevent It? An inquiry is a negative mark that does not carry significant weight. If you are applying for a loan, such as a car loan, the impact will be minimal and temporary. However, inquiries can become more significant if you frequently apply for loans or credit cards.

Collections, Charge-Offs, Repossessions, Foreclosures

If you fail to pay your loans on time, your account will move into the collections phase. The lender will first try to work out a payment plan with you. If the loan has collateral, such as a car or house, they may have to repossess the vehicle or foreclose on the home. If the loan doesn’t have collateral, such as a personal loan, they may charge off the loan and use the courts to recoup their losses. 

How Long Will it Affect My Credit? Collection items can remain on your credit report for up to 7 years.

How Can I Prevent It? If you’re facing financial difficulties, it’s always best to reach out to your lender as soon as possible. The earlier you make your situation known, the more solutions they will have to help you.

Bankruptcy

When all other financial options are exhausted, you may choose to file bankruptcy. This is the legal process of eliminating all or part of your current debts. Typically, you will be required to repay a portion of your debt utilizing a payment plan.

How Long Will it Affect My Credit? Whether you file Chapter 7 or 13, a bankruptcy can remain on your credit report for up to 10 years.

How Can I Prevent It? Filing for bankruptcy is one of the most harmful items you can have on your credit report. While it may seem like your only option if your debts are significant, other solutions may be available. Before deciding to file bankruptcy, always seek the guidance of a financial advisor and attorney first.

What Can I Do If I Have Negative Marks on My Credit Score?

Finally, remember that all negative marks eventually come off your credit report with time – and negative marks don’t have to define your financial future. Start by checking your credit report for errors and disputing anything inaccurate. Then, focus on building positive habits like making on-time payments and reducing debt—every step you take moves you closer to a stronger credit score.

We’re Here to Help with Your Credit History!

The benefits of an excellent credit score are many; however, getting to that level may sometimes feel overwhelming and confusing. It’s important to remember that even if you make mistakes along the way, that’s ok. Learn from the hiccup and keep moving forward.

Whether you’re just starting to build your credit history or you’re trying to rebuild your score, we’re ready to help. We’re here to answer all your questions and provide one-on-one financial guidance to help you reach your goals. Please stop by any of our convenient branch locations to get started today. 

 

© Genisys Credit Union and www.genisyscu.org, 2022. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited.  Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content.

 

« Return to "Blog"