Many people find themselves in a situation where they have bad credit. People have financial problems and have a hard time paying their bills on time. Sometimes, they get divorced and the income that was paying for one household is now paying for two. Maybe medical bills have put you in a tough place. Whatever the reason, you should know that bad marks on your credit are not permanent.
Time Frame
Information stays on a credit report for different amounts of time, depending on the nature of the information. Derogatory accounts, or accounts with late payments, charge-offs or other negative information, stay on your credit report for seven years from the original date of delinquency. Chapter 7 bankruptcies stay listed on your report for 10 years from the date of filing. A Chapter 13 bankruptcy will remain for seven years from the filing date. Public records, such as judgments or liens, will stay on your report for 7 years from the date that you paid them, or indefinitely for an unpaid tax lien.
Considerations
While not necessarily negative marks, inquiries or requests people make to view your credit report stay on your report, visible to everyone, for two years. Soft requests, or requests from people that you do business with or people requesting to see if you fit a general profile, stay for the same two years, but are only visible to the person who is named on the report. Positive credit accounts are generally kept on your report for 10 years from the date that the account was closed.
Function
Negative entries have a serious effect on you and your credit. You may have problems getting credit at a good rate, if at all. You may pay a higher premium for car insurance. You may also have a problem getting a new job.
Prevention/Solution
Derogatory marks have less of an effect on your credit as time passes. You can take other steps to improve your credit. Pay down your credit card balances to less than 30 percent of your available credit. Use your credit cards lightly, so that they are not reporting your statement ending balance being more than 30 percent of your available credit. Check your credit limits, to be sure that they are being reported correctly, and use an older credit card. Part of your credit score is based on the length of time that you have had credit.
Warning
If you are behind on bills, or have balances that are impossible for you to pay, you may consider filing for bankruptcy. This is not a decision that you should take lightly, but it may be what you need to do. Bankruptcy destroys your credit with the ultimate derogatory mark, but the good news is that your credit generally improves after this. This is because the banks have stopped reporting the negative accounts. As negative entries get older, your credit score increases.
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