While negative items on your credit report might feel like a millstone around your neck, the penalty to your score does fade, and the blemishes will disappear from your credit history… eventually. And the good news is that good credit also stays on your report—for up to ten years. Here’s a look at how long both good and bad credit activity will haunt or help you, and what you can do to change that.
Most credit activity lasts 7 years
The Fair Credit Reporting Act (FCRA) is a federal statute that defines how long certain information may legally remain on your credit report. For the most part, it will be 7 years, although there are some exceptions. Here’s what you can expect:
- Credit inquiries (2 years): When you apply for a new line of credit, a lender will do what’s called a hard pull (or hard inquiry), which is a request for your credit history. This is actually a neutral event, but opening up a lot of credit lines in a short period of time can be a red flag, which is why it ends up on your credit report.
- Late or missed payments (7 years): If a late payment goes past the 30-day grace period, it will remain on your credit report for 7 years, even after you pay the past-due balance. As an item in your credit report, this might include any notation that one or more of your accounts was 30, 60, 90, 120, 150, or 180-plus days past due. The later your payment, the worse it is for your credit score.
- Collection accounts (7 years): If you ignore late payments, they eventually get assigned to a collection agency. Even if you pay the collection account before the seven-year period is up, it will remain on your credit report.
- Charge-offs (7 years): A charge-off is when a lender closes off an account because they don’t believe that you can service the loan. You’re still on the hook for the debt, however, and it leaves a black mark in your credit report.
- Chapter 13 bankruptcy (7 years): With a Chapter 13, borrowers who have a stable source of income will agree to a repayment plan that pays off a substantial portion of the outstanding debt within three to five years, after which the remaining balance is discharged.
- Chapter 7 bankruptcy (10 years): A Chapter 7 bankruptcy—or a straight bankruptcy—is viewed less favorably by lenders as there is no repayment plan involved. For that reason, Chapter 7 bankruptcies can remain on credit reports for up to 10 years from the bankruptcy’s filing date.
- Open accounts in good standing (indefinitely): Fortunately, making on-time payments on a given line of credit will stay on the books for as long as you have the account.
- Closed accounts in good standing (10 years): Your credit score can benefit from the afterglow of, say, a closed credit card account in good standing, long after you paid off the balance.
Now, the good news
While negative items stay on your report for a long time, their impact on your credit score will fade over time, provided your borrowing behavior has improved. Unfortunately, credit agencies are vague about exactly how quickly good behavior will improve your score, but the penalty for most events will fade within a few years (or a few months, in the case of hard inquiries). The exception is a bankruptcy, which can fully affect your credit score until it’s finally off the books for good.
Also, if your recent credit history is good but you have some old blemishes in your report that you’d like erased, consider sending what’s called a “goodwill letter” to the relevant credit bureau. There’s no guarantee that it will work, but your request will get more traction if you can plead financial hardship (because of, say, a pandemic). This Lifehacker post will walk you through the steps.