When negative information shows up on your credit report, it will cause your credit score to drop. Negative information includes things like late credit card and loan payments, maxed out credit cards, debt collections, bankruptcy, and excessive credit inquiries. This type of negative information will hurt your credit score in the short-term, but fortunately, these things won’t hurt your credit forever.
Most negative information will only remain on your credit report – and influence your credit score – for seven years. After that time, it’s no longer legal for most negative information to be included on your credit report. Therefore, it can no longer hurt your credit. If you have old, negative information lingering on your credit report, you can use the credit report dispute process to have it removed.
There is one thing that can still affect your credit even after seven years. That’s bankruptcy. A bankruptcy filing can hurt your credit for as many as 10 years. It will remain a public record forever, but it will only be reported on your credit history for 10 years. Once bankruptcy falls off your credit report, it won’t continue to hurt your credit. Note that even though bankruptcy falls off your credit report after ten years, most credit card and loan applications will ask whether you’ve ever filed bankruptcy. If you’re not truthful, you could be found guilty of fraud.
Credit report inquiries are placed on your credit report whenever you make an application for a credit card, loan, or other service. These inquiries stay on your credit report for up to two years, but they only hurt your credit for one year.
Negative credit information hurts your credit the most when it first happens. The older the information, the less impact it will have on your credit. For example, a six-month old late payment will hurt your credit score more than a late payment from six years ago.
You can have inaccurate negative information removed from your credit report by submitting a credit report dispute. Let the credit bureau know your credit report contains an error. The credit bureau will do an investigation and if the investigation returns in your favor, the error will be removed from your credit report and it won’t continue to affect your credit.