How long do negative items stay on your credit report?

Many Americans are struggling to put their personal finances in order amid the pandemic as they are dealing with debt and other credit issues. If you're one of them, you're not alone and there are credit repair steps you can take. Often, the first step is determining where your credit score currently stands by checking credit reports from the three credit bureaus.

Once you've had a chance to look at a copy of your credit report, it's important to check for errors. Assuming the information listed is correct, it may take some time for negative items (or derogatory marks) to fall off your credit report. Read on for a look at four common negative items -- foreclosure, bankruptcy, missed payments and collections -- and how long they will appear on your credit report.

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What are common negative items on a credit report?

1. Negative event: Foreclosure

How long it will stay on your report: 7 years

What to do to improve your credit score: After foreclosure, you want to send as much positive information to the credit reporting agencies as possible in order to improve your score as much as possible. With that in mind, be sure to keep on top of your balances and payments. Make an effort to avoid late or missing payments, and to pay as much above the minimum payment as possible. While you're working to pay off debt, try to keep your balances as low as possible since maintaining a low credit utilization rate also raises your FICO score.

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2. Negative event: Bankruptcy

How long it will stay on your report: 7-10 years, depending on the type of bankruptcy. A Chapter 7 bankruptcy remains on your credit report for 10 years while a Chapter 13 bankruptcy will only be part of your credit history for seven years.

What to do to improve your credit score: After bankruptcy, it's important to start to re-establish credit. While you may not qualify for a traditional credit card at this point and too many hard inquiries may further damage your score, getting a secured credit card may be a good option. Since secured credit cards require a deposit to open instead of checking in with the credit reporting agencies, they may be a good place to start,

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3. Negative event: Missed payments

How long it will stay on your report: 7 years

What to do to improve your credit score: Unfortunately, your payment history is one of the most important factors in determining your credit score, so being more than 30 days late in making a payment will have a negative impact on your credit score. However, since your most recent payment history is weighted the heaviest, the impact will fade over time as long as you can make a commitment to keeping up with your payments.

In the meantime, you can also focus on strengthening other aspects of your credit score. For example, you can stop opening new accounts or only open lines of credit that require soft inquiries rather than hard inquiries.

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4. Negative event: Collections

How long it will stay on your report: 7 years

What to do to improve your credit score: According to Experian, newer credit scoring models ignore collection accounts with a zero balance. With that in mind, a good way to improve your credit score is to settle the debt as soon as possible. However, keep in mind that not all lenders use newer credit scoring models, so your score may still be impacted.

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The bottom line

While negative events will impact your credit score, they won't last forever. Additionally, if the negative event is due to identity theft or fraud, you can always work to dispute the credit report. In that case, your best bet would be to sign up for a security freeze and credit monitoring services. Many of the credit card issuers also offer free credit monitoring if you were the victim of a security breach under their watch.

However, even if you weren't a victim of fraud, it's a good idea to monitor your credit at all times. Be sure to check your reports often, including public records, and to be careful with where you share your personal information. Ultimately, practicing smart financial habits and valuing online security are the keys to minimizing the impact of negative items on your credit report.

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