When Do Negative References Get Removed From Your Credit Report?

These days, an individual’s personality, success and education can all be defined on “records”.  In high school and college, you’ve got your permanent record, which really isn’t that permanent but is useful in scaring students into staying on the straight and narrow.  Once you turn 18, you have your “criminal record” which usually sticks with you no matter what you do or where you go (Unless you “know a guy”).  And finally, you have your financial record, also known as your credit record, which defines whether or not you are a fiscally responsible human being.  Thankfully, your credit report and scores are anything but permanent, and if you can build a strong credit history from any point in time, eventually, your score will reflect your hard work.

But just how long does negative information stay on your credit report and what can you do to make sure they are removed in a timely fashion?  Well, depending on the type of negative account you have, the time line can vary.  Rule of thumb is generally the bigger the mistake, the longer it stays on your credit report. But let’s have a look at a more accurate timetable.

Errors In Your Credit Report / Removed Immediately – If you find a negative account that you are certain doesn’t belong to you, you need to contact both the credit reporting agency as well as the creditor that has the negative account against you ASAP.  If you can stay calm enough and not lose your temper, you should be able to have the negative account removed within 180 days.

Inquiries / Two Years – Anytime your credit report is pulled at your request, an inquiry is placed on your credit report.  An inquiry here or there is no big deal, however if you have a large number of inquiries within a short time period, that usually tells your creditor-to-be that you need money and fast.  The more inquiries on your report, the lower your score will drop.  One of the shorter drop-offs, inquiries only last on your credit report for two years.

Hard Inquiries vs. Soft Inquiries: Not all inquires hurt your credit score. When you apply for a credit card, the creditor pulls your credit report resulting in a hard inquiry that potentially may lower your score. Soft inquiries occur, for example, when you get your credit score, get an auto insurance quote, or when companies check your credit for purposes of making unsolicited credit offers. These soft pulls do not hurt your score.

Late Payments / Seven Years – In rare instances, you have the ability to negotiate with your creditors and have past late payments deleted.  A late payment can occur whether your account is 30 days past due, all the way up to where your account is 150 days past due.  Some creditors are lenient and will delete past credit problems if you settle your account ASAP.  Others will not be as kind and force you to see these negative remarks for seven years.  Seven years from the first day the delinquency was reported will be the day that the information is deleted from your credit report.  These negative accounts are the most common and effect your credit score the least. (Among the negative accounts mentioned)

Tax Liens Paid / Seven Years – A tax lien usually occurs when the local, state or federal government takes ownership of property because you haven’t paid your property or income taxes in a timely fashion.  The government is going to fight the good fight to recover the money they are owed. No matter how fast you pay them, this negative account will stay on your credit report for a full seven years.

Tax Liens Unpaid / Fifteen Years - In the event that you have a tax lien against you that continues to go unpaid, it can stay on your credit report for a whopping 15 years.  The chances of you being able to keep money from the government is slim to none to begin with, and the added penalty of keeping it unpaid hardly seems worth the effort.

Foreclosures / Seven Years – One of the most severe negative accounts you can have on your credit score, a foreclosure will last on your account for seven years.  You can also bet that if you have a foreclosure on your record, the chances of you being able to own another home in the short-term without paying for it entirely in cash is a long-shot.

Student Loan Defaults / Seven Years – Before the George W Bush administration, student loans were commonly forgiven if they were declared during a bankruptcy hearing.  Now-a-days, it is rare to find a bankruptcy judge that will forgive a student loan so it’s important to take them seriously.  Defaulting on a student loan usually occurs after 270 days of non-payment. So before the default is reported, you will be sure to receive a lot of late payment marks.

Lawsuits or Judgments / Seven Years – You should be noticing a seven year trend by now, and if you’re unfortunate enough to lose a court case, you can expect to see the judgment on your credit report for seven years after the court case was first filed. If you’re able to settle out of court before a verdict is made, the negative account should not find its way onto your credit report.

Charge-Offs / Seven Years + 180 Days – A charge-off occurs when your creditor throws in the white towel and determines your debt is not collectible.  This usually occurs after 6 consecutive months of non-payment, but the time line is at the sole discretion of the creditor.  Generally, once a creditor charges-off the amount, they offer it up to a collection agency, which attempts to collect upon the debt. After seven years of the charge-off being reported, it should be removed from your credit report. The seven year period begins to run 180 days after “the month and year of the commencement of the delinquency that immediately preceded” the chargeoff.

Bankruptcy / Ten Years -  Now we’re getting into the big boys.  Bankruptcy is the sin of all sins on a credit report, and when a creditor runs your report and finds this on it, you may as well be saying “I cannot be trusted with any money for the next 10 years.”  There are a few different options when filing for bankruptcy, but all of them lead to the same end, which prevents you from opening the smallest of credit accounts.  Bankruptcy should only be used if you have weighed all of your available options, because it is a death penalty like no other when considering your credit report and score.

You should check your credit score, and check it often, as gaining credit is an important step in growing your financial portfolio.  Just as important is being responsible with credit and knowing how and when different actions will affect your future.

Published or Updated: May 4, 2011

Comments

  1. Karen Heaverlo says:

    If the charges have been written off and sent to a collection agency and you have made timely monthly payments for 2 years to this agency can the negative report be reversed? There were multiple charges to dr, anest & hospital for a one time visit to the hospital, I was not able to pay all of them what they wanted so it went to collections very fast, I made a lump sum payment to the collection agency and have continued to do so for 2 years. Last month they reported me for being late with one of the items included on the amount I have been paying on and it was for 8 dollars. I think it is a crime to trash ones credit for medical bills that you can not afford to pay because you are sick. But when you try and do the right thing, you get nowhere fast. My revolving bills are paid on time every month have been for at least ten years, it has been the medical bills that hurt us. Can you advise me of anything I can do? I have already gone thru the dispute processes and waiting, i have called the collection agency without much help.

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