Missing a payment on your credit card can have long lasting effects. Many people do not realize just how long a blemish on their credit report will stay with them. You can easily be answering questions to your future creditors about why you missed several payments as far back as seven years into your past. If you want to use some type of credit or apply for debt in the future, you should carefully consider the actions that you are taking today.
Accurate Negative Information Stays On Credit Report For Seven Years
According to the Fair Credit Reporting Act (FCRA), most negative information about your debts and failure to pay on time what you owe stays on your credit report for a minimum of seven years. Almost every negative mark that can be found on your credit report will last for seven years. So, for example, mistakes that you make today will not be erased from your credit report until the year 2019. In addition to negative aspects of your credit such as failing to make a credit card or other loan payment, lawsuits or judgments against you that you did not pay can be added to your credit report for seven years or until the statute of limitations runs out. If you default on U.S. Government insured or guaranteed student loans, those can also be reported for seven years on your credit report.
Bankruptcies Stay On Your Credit Report For Ten Years
A bankruptcy is one of the worst kind of blemish that a person can have on his or her credit report. It will do the most damage to a person’s credit score. A bankruptcy will stay on a person’s credit report for ten years. It could possibly affect many aspects of a borrower’s life and cause trouble even finding employment, an apartment to rent, or even receiving new utilities without building his or her credit score back up. Even the military strongly considers a person’s credit score before granting them a security clearance.
Not The Same As the Statute Of Limitations
The Statute of Limitations has nothing to do with the length of time a negative mark stays on your credit report. You cannot be sued for debts that are past the statute of limitations once that period has elapsed, but that data may still remain on your credit report if the seven to ten years has not passed. Some states have more lenient statutes of limitations were a debtor cannot be sued by a lender. In some states, the statute of limitations for debt is as few as two years for certain types of debts. It is important to understand the difference between how long a negative mark stays on your credit report and the statute of limitations. They are two separate entities entirely.
The length of time a negative mark can stay on your credit report starts from the time you missed a payment. It does not start or restart from the time you made the last partial payment on the account. Some collection agencies try to keep a debtor’s account active with the credit bureaus to extend the time the account appears on a person’s credit report. This is against the Fair Credit Reporting Act and against the law. Consumers should be watchful of such acts and should continuously check their credit reports.
Hank Coleman is a writer, entrepreneur, and professional in the government sector. He holds a Bachelor’s Degree in Business Administration, a Master’s in Finance, and is currently studying for his Certified Financial Planning (CFP) credentials. Be sure to follow him on Twitter @HankColeman.