Your credit reports, compiled by the TransUnion, Equifax and Experian reporting agencies, contain neutral data, such as your name, current and previous addresses and employers, phone number and Social Security number. Your credit bureau files also have information considered either positive or negative by creditors. Lenders weigh the good and bad when you submit credit applications, and they base their decision on you creditworthiness -- whether you are a good credit risk or likely to default -- on information in your credit report .
Positives
On-time payments are the most important positive items on your credit reports, because lenders want to deal with responsible people who pay bills as promised. Your credit score is based on credit report data, and 35 percent of your credit score is determined by the payment history on all your accounts, according to the MyFICO scoring company. Creditors also like to see a mixture of revolving credit, such as credit cards, and installment loans rather than just one account type. The amount of debt on your credit report can be a positive factor if the percentage of debt is low compared with your credit limits.
Negatives
Negative credit report information includes anything that shows you are having trouble making payments or are deeply in debt. Late payments are extremely bad for your reports, as are delinquency entries, including any balances charged off as bad debt, foreclosed homes, repossessed cars, bankruptcies, accounts being managed by debt collectors and lawsuits for non-payment. If your credit card balance is at or near your credit card limit, that is a negative item on your credit report. MyFICO warns that too many inquiries for new accounts within a short time also hurt your credit rating, especially if you make more than six within a few months.
Time Frame
Most of your credit report negatives are removed from your files by TransUnion, Equifax and Experian automatically after seven years, according the Federal Trade Commission (FTC). Data covered by this reporting limit includes late payments, account write-offs, collection agency entries, car and home repossessions and court judgments for unpaid bills. Bankruptcy is subject to a longer time frame, with automatic erasure in 10 years. Positive credit report entries show up indefinitely as long as the accounts are open, Experian notes. Positive closed accounts generally disappear in 10 years.
Considerations
Creditors pay the most attention to your recent financial activity, even though credit reports go back seven to 10 years. Bad credit can be repaired over time if you bring past-due accounts up to date and build up a long string of timely payments while paying down high account balances, according to MyFICO.
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