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It’s happened to many of us at some point in our lifetime. We forgot to make the credit card payment, or ran into unexpected financial difficulty that made it temporarily impossible to pay all of our bills on time, or even experienced a collection, repossession, or bankruptcy. Even if it was as simple as being a few days late with your credit card payment, it leaves a black mark on your credit report that drops your score significantly and serves as a huge warning flag for future creditors.
The good news is that eventually even the worst of your credit mistakes drop off your credit report. The bad news is that depending on the situation, it can take a while. So, how long do derogatory marks stay on your credit report?
Just How Long Are We Talking?
Positive credit history can stay on indefinitely, which can help creditors looking at your report to see that perhaps you hit a rough patch but are generally a good borrower. Bad history, however, can stay for quite some time as well, causing problems the entire time. Thankfully, the longer it’s there, the less it’s going to affect you.
A bankruptcy can drop your score by up to 150 points, and will show up for the next 7-10 years every time someone looks at your credit report. Since it’s public record, it’ll also show up in any public records about you, easily searchable in Google. According to FICO, if the bankruptcy is the only bad mark you have, you can still get back to a good credit score after about 5 years, assuming you stay on track during that time and don’t have any additional late payments.
Most other types of derogatory marks stay on your credit report for 7 years, including repossessions and foreclosures; that’s when a creditor takes back the property or vehicle because of non-payment of the loan. When original creditors send a bill to collections, that also shows up as a black mark – even after you’ve paid it. While it helps to show it as paid, it still hurts your score because according to creditors, it shouldn’t have gone to collections in the first place.
Even something as small as one late payment can drop your credit rating and stay on your record for 7 years. If you accidentally missed a credit card payment, you should immediately call the card company, explain the situation, and not only make the payment but ask if they can refrain from reporting it as late, saving you 7 years of derogatory information on your credit report.
Charge-offs, tax liens, and court judgments also stay on your record for 7 years. Judgments and tax liens are also public records that become attached to your name in any internet search, and no amount of negotiation can remove them from your public record. Paying them off, however, can often help raise your score slightly, and if you’re applying for a mortgage, often a letter from the creditor affirming that it’s paid goes a long way toward helping you get approved, even if the item is still on your report.
Even with some of the mitigation strategies, derogatory marks of any variety have a negative effect on your ability to rent/buy property, be approved for a vehicle loan, or even get a job. If anything, knowing how long derogatory items stay on your credit is the best inspiration of all for simply avoiding them at all costs.
Author: Jeff Gitlen
Jeff Gitlen writes about a wide range of finance topics including everything from student loans to credit cards to small business financing. Jeff's work has been featured on a number of sites including Bloomberg, CNBC, Forbes, Market Watch, and more.