Adverse Credit Information

Adverse credit information is a major component of your credit rating, known as a FICO score. Different adverse reports remain on an individual's credit report for varying lengths of time; some are more damaging than others. Paying off debts may improve a credit report; however, certain negative information remains on a credit report even after debt has been paid.

Late Payments

Financial companies calculate payment histories on 30-, 60-, 90- or 180-day schedule. A payment is considered late if it is made more than 30 days after the original due date. The more late payments that appear on a credit report, the more adverse effects the payments have on a credit rating. Late payments remain on a credit report until paid, but a history of the late payments may remain long after that.

Charge-offs

Charge-offs occur when a creditor gives up on attempting to collect a debt. Then the creditor turns it over to a collection agency that will try to collect the debt. Charge-offs, considered more negative than late payments, may remain on a credit report for up to seven years after they were first filed with the credit reporting bureau.

High Debt Ratio

Even for consumers who make credit card and loan payments on time, a high debt ratio (the percentage of financial obligations in relation to income) can also adversely affect a credit score. Potential creditors view high debt ratios as a red flag for future credit problems. Credit reports show high debt ratios for as long as the circumstances exist. Cutting back on debt can improve debt ratio and, by extension, a FICO score.

Derogatory Public Records

Derogatory public records, such as bankruptcy and foreclosure, remain on a credit report for years after the fact. Bankruptcy can be reported for up to 10 years, even after being fully discharged. Foreclosures and other adverse public information, including tax liens, remain on an individual's credit report for up to seven years. Unpaid tax liens typically remain on a credit record forever.

Considerations

Each credit reporting agency includes different items within their reports, which contributes to the possibility that the same person may have different credit scores with different agencies. While credit reports may be obtained for free, you have to pay a fee to a credit reporting agency or to a credit protection service to receive a FICO score.