Your credit report contains records documenting your financial behavior. In addition to positive financial data, such as mortgages, credit cards and car loans in good standing, it also lists negative information, such as your unpaid debts, charged-off cards and collection accounts. This negative information damages your credit rating and can impact your chances of finding a job or getting additional credit. Fortunately, negative information doesn't stay on your credit report forever.
Collections and Late Payments
Whenever you pay a credit card or loan bill after its due date, your creditor reports the incident to the consumer bureaus, which place the information on your credit report. These incidents remain on your credit report for seven years, according to Fair Isaac, the company that designed the credit-scoring software the consumer reporting bureaus use. Additionally, some creditors will send your account to collections after you miss several payments. Collection accounts also remain on your report for seven years.
Foreclosures
Missing mortgage payments can lead to foreclosure, in which your bank repossesses your home and sells it at auction. In addition to losing your home, foreclosure also ruins your credit profile. Along with the credit hit associated with late or missed mortgage payments, your lender will report the foreclosure itself to the consumer reporting bureaus, which will place it on your credit report. Foreclosure will stay on your credit report document for seven years.
Bankruptcy
If you are in extreme financial distress, filing for bankruptcy is an option. In the United States, two main types of personal bankruptcy exist. In Chapter 7 bankruptcy, a federal court wipes out your outstanding debt -- excluding certain liabilities such as student loans -- and orders you to sell your nonessential property to compensate your creditors. Chapter 7 bankruptcy shows up on your credit report for 10 years. Chapter 13 bankruptcy allows you to pay your creditors back over an extended time period, usually three to five years. This form of bankruptcy shows up on your report for seven years.
Public Records
Public records, including tax liens, lawsuits and legal judgments resulting from financial activity, also affect your credit profile. These items typically remain on your credit report for seven years. However, unpaid tax liens can stay on your report indefinitely, according to 2011 information from Fair Isaac.
Credit Score
Although negative items remain on your credit record for years, their impact on your credit score -- the number companies use to figure your creditworthiness -- lessens over time, according to Fair Isaac. For instance, a bankruptcy from six years ago will have a much lesser impact on your score than one filed a few months ago.
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