“Improving Your Credit: A Guide to Managing Negative and Positive Entries”

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How Long Negative Items Remain on Your Credit Report

Negative credit report entries, which can adversely affect your credit scores and signal poor credit habits to lenders, typically stay on your credit report for up to seven years. The exception is Chapter 7 bankruptcy, which remains for 10 years. Positive entries, which indicate good credit management, last at least 10 years and may remain indefinitely.

How Long Negative Items Remain on Your Credit Report

The “countdown clock” for the expiration of negative credit report entries varies by type. Most negative entries expire seven years after the first missed payment or delinquency that led to the entry. Bankruptcy entries expire based on the filing date.

• Defaults: Seven years from the original delinquency date. A default is recorded if you miss a scheduled payment for 90 days.
• Accounts in collections: Seven years from the original delinquency date. Accounts are turned over to collections after several months of missed payments.
• Foreclosures: Seven years from the original delinquency date. Foreclosure can be initiated after 90 days without a payment, with property seizure occurring after at least 120 days.
• Late payments: Seven years. Missed payments that don’t lead to more serious events expire after seven years.
• Chapter 13 bankruptcy: Seven years from the filing date. This type of bankruptcy involves full or partial repayment of creditors.
• Chapter 7 bankruptcy: Ten years from the filing date. This allows you to keep exempt property, sell certain property to repay debts, and discharge remaining debts.

How Long Positive Items Remain on Your Credit Report

Positive entries, which benefit your credit scores, remain on your credit report for at least 10 years. Examples include:

• Closed, positive accounts with no negative history: Ten years from the closure date. This includes installment loans paid off as agreed and credit card accounts in good standing that you choose to close.
• Open accounts in good standing: May remain indefinitely. The payment history on open credit card accounts can stay on your credit reports indefinitely, contributing to your credit history length and timely payment record.

How to Improve Your Credit

If your credit reports contain negative entries, your credit scores may be affected. However, there are proven steps you can take to improve your credit scores:

• Pay your bills on time: Timely payments are crucial for your credit score. Even one late payment can significantly harm your scores. Make it a habit to pay your bills on or before their due dates.
• Avoid high card balances: Credit utilization, the percentage of your credit limits compared to outstanding balances, is important. Utilization above 30% can hurt your scores.
• Apply for new credit only as needed: Hard inquiries from loan or credit applications can cause short-term dips in your scores. Multiple applications in a short period can have a cumulative negative effect.
• Cultivate a healthy mix of credit accounts: Managing multiple debt types successfully is valued by lenders and credit scoring systems. A mix of revolving accounts and installment loans can improve your scores.
• Stay the course: Negative entries eventually expire. The longer your history with specific cards or loans, the better your chances for score improvements. Maintain good credit habits to see your scores rebound over time.

The Bottom Line

While seven years (or 10 years for Chapter 7 bankruptcy) may seem long, it’s not forever. The negative impact on your credit scores will diminish over time if you focus on building good credit habits. Track your scores’ recovery by checking your credit score from Experian for free each month.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your credit journey and achieve your financial goals.

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