When it comes to your credit health, thinking positively can go a long way. But to truly understand how your credit report affects your credit health, it’s also important to focus on the negatives. That’s because the fewer negative items on your credit report, the healthier it may appear to those evaluating it.
The first thing you should know is the national credit bureau (TransUnion, Experian or Equifax) producing a given report must remove negative items after they’ve been on your report for a certain amount of time.
The questions are these: what kinds of negative items and when? The answers are not as straightforward as you may think.
If your report shows a late payment, that payment must be removed 7 years from the day you missed the payment.
Collections / Charged-Off Accounts
If you have an account that has been sent to collections or charged off, it will drop off of your credit report 7 years from the day you missed your first payment, not 7 years from the day the account was sent to collections or charged off.
For bankruptcies, the mention of the bankruptcy will generally remain on your credit report for up to 10 years from the date you filed.
A completed or dismissed Chapter 13 bankruptcy remains on your file for up to 7 years from the date filed.
Regardless of which type of bankruptcy you file, the actual accounts included in bankruptcy remain on your file for up to 7 years from the date of closing/last activity.
Though inquiries generally don’t have too much of a negative impact on your credit health, they can be seen as a drag on your creditworthiness if your report lists too many of them in too short of a time frame.
Inquiries usually fall off your credit report 2 years after the date they were made.
Public Records, Generally
Civil judgments, foreclosures, forcible detainers, garnishments and attachments generally remain on your report 7 years from the date those actions are filed in a legal proceeding.
Public Records: Tax Liens
Tax liens are a little trickier. Paid tax liens will stay on your report for up to 7 years from the date it’s paid off. Unpaid tax liens, on the other hand, remain on file for as long as they remain unpaid.
To sum up, the most negative items remain on your report for up to 7 years. Bankruptcies can remain on your report for up to 10 years and inquiries drop off your report after 2 years.
Though the best course of action is to avoid having negative items on your report by paying your bills on time and avoiding too many credit applications, it’s a good idea to know what the rules are.
That way, if you have some negative credit report items, you’ll know what to expect and what you can do to work toward healthier credit.
This article first appeared here.