How long does negative information really stay on a credit report and how long will it affect scores? This can vary based on what the negative information is, but in most cases it’s going to be seven years. As it ages there will be less and less of an impact on a credit score, but will have at least some affect for the entire seven years.
Let’s break it down:
Collection accounts - will remain on a credit report for seven years from the date it first became delinquent. Years ago if a collection was sold during that time, the seven-year time frame started all over but that is no more. No matter how many times a collection is sold it must fall off the report after the initial seven years. For example, if ABC collection held the account for five years and then sold it to DEF collection, after two years it would fall off paid or unpaid. The clock does not start over when a collection is sold. Let’s say a collection agency has not collected on a debt and after four or five years the original creditor that hired the collection agency decides to recall the collection, then that collection agency should fall off immediately. If a debt is returned to the original creditor, then the collection agency legally can no longer report the account.
Charged off accounts - same as a collection account. It should fall off seven years from the first late payment that preceded the charged off status whether it is paid or not. If they have sold the account to an outside collection agency, even if it was several years after, both accounts should fall off at the original seven-year mark.
Judgments - will remain on your credit report for seven years from the date filed or until the statute of limitations runs out. Some states have statute of limitations that is only five or six years, but for most states it is seven years.
Tax liens - Paid tax liens will normally stay on your credit report for seven years from the date it was paid (released). Unpaid liens can stay on a credit report for up to 15 years. Again this will vary some depending on the statutes in each state.
Bankruptcies - A chapter 7 Bankruptcy will remain on a credit report for 10 years from the date filed. A Chapter 13 bankruptcy will remain for seven years from the date filed. While the Chapter 7 bankruptcy will remain as a public record for 10 years, the credit accounts that were included in the bankruptcy should only remain for seven years.
If there is a collection, charge off or judgment on a credit report it’s not always a good idea to pay it, especially if it is older and let’s say has only one or two more years before it falls off on its own. When you pay any of these, it brings the reporting date to the current date, making it look like a new collection and can actually have a negative affect on the credit score. So before paying any of these off it is always a good idea to find out exactly when the collection or charge off began. If it was several years ago it might be better to wait out the additional few years and let it fall off on it’s own, instead of taking the chance of updating that reporting date and possibly hurting the credit scores even more.
Seven years can seem like a long time but time really does “heal all wounds.” The older the negative information is the less it will affect the credit scores. It will always have some affect but lessens as it ages. If any of the above does appear on your credit report, eventually it will go away, paid or unpaid.
By: Mindy Leisure, Rescore Express Manager at Advantage Credit.
TMC - Chief Operating Officer
President/CEO - Pulte Financial Services