This debt management article will help you understand the public record information contained in one’s credit report.
Ideally, you will always be gainfully employed, you will never have a late payment, you will pay off every debt, and you will never owe more than is considered “healthy.”
If you actually accomplish this, you shouldn’t have any problems when your credit report is pulled for whatever reason. (Unless of course, the credit bureaus have made a mistake with your report, which is a totally different subject.)
For most people, however, it’s difficult to go through life without making a single mistake, especially if you’ve ever experienced any financial hardship, such as the loss of a job or a large medical debt. So if you’re trying to get your record back into good condition, you need to know how long the information that’s put on your record stays there.
Essentially, a credit reporting bureau is a clearinghouse for information about how you handle credit and debt. Every time you apply for additional credit, the potential new creditor receives a report including your name, address, and employer, along with a list of your credit history, good and bad. These reports also contain information that’s a matter of public record, such as bankruptcies or felony convictions.
How long the “blemishes” stay on your report depends on the discrepancy. One of the most common and most severe credit problems reported is a bankruptcy.
A bankruptcy can stay on your credit record for up to 10 years, which is why it should be considered only as a last resort. Having a bankruptcy on your record means you will have problems being approved for credit for a long time. And the loans you will be able to get come at a high interest rate.
Another very serious problem you want to keep off your credit report is the foreclosure of your home. This happens when you get so far behind on your house payment that the mortgage company takes your home from you. Foreclosures stay on your credit report for between seven and 10 years and make it nearly impossible to qualify for another mortgage.
Other negatives on your credit report include accounts that have gone to a collection agency, as well as charge-offs and past-due accounts. These can stay on your record for seven years. And if the debt is never resolved, you will likely have to pay it off the next time you try to qualify for an auto loan, mortgage or other type of bank loan.
These are probably the most common types of credit problems. But there are others that are relatively common as well, including:
- Judgment. Not only does a judgment stay on your record for seven years after the debt is satisfied, it can be renewed every four years, with up to two renewals, before the debt is paid.
- Tax Lien. It takes seven years from the date you satisfy the debt to clear a tax lien from your record. And if you never pay it off, it stays on your record indefinitely.
- Student Loans. If the loan is federally-insured, as most student loans are, it will stay on your record for seven years after it is filed for repayment with the federal government.
- Inquiries. One of the biggest mistakes people make is to file numerous applications for credit, because every inquiry stays on your record for two years, whether you are approved or not. And if you are constantly trying to borrow money, most creditors will consider you a bad risk.