Older items can be very good or very bad for your credit score
Image Source: Flickr User GotCredit
Your credit score affects so many things in your life – how much you pay for natural gas, car and homeowner’s insurance, interest rates on auto and home loans – and myriad other things. If you’re dealing with debt you can’t afford to pay, your credit score will take a beating for late payments, over limits, and using too much of your revolving credit line. But how long do these negative items stay on your report – and can bankruptcy help you clear up your messy debt problems?
How long does positive credit information stay on your credit report?
The good news is, positive credit items linger on your credit report longer than most negative items. This is even better because FICO weighs older accounts more heavily. If you can keep an older account in good standing – like a credit card you’ve had since college, it will benefit your score.
If you had an account that you paid as promised, it would stay on your credit report for 10 years. If you have a credit card account that was paid as agreed but is no longer active, it will also stay on for a decade. For a mortgage paid off and in full, it will remain on your report for 12 years.
How long does negative credit information stay on your credit report?
Most negative items linger for less time than positive items, but there are some exceptions. Also, making occasional payments on the past-due debt will reset the clock on how long it stays. If you have an item that would be on your credit report for seven years and is past due then you make a small payment, the seven years start again from the date of that payment.
This is why it’s generally not advantageous to pay on older accounts that are getting close to falling off your report. Accounts that are paid late will fall off your report seven years from the last payment date. Charged off accounts will fall off seven and a half years from the delinquency date (i.e. the date you stopped making payments that led to the account being written off by the creditor).
Tax liens linger for a whopping 15 years or until you pay them off. Judgments last the longer of (1) seven years from the date the judgment was filed; or (2) when the statute of limitations expires. And accounts that still show open will continue to post negative information to your report every month that you don’t make a payment. Delinquent debt will drag your credit score into the gutter.
How can bankruptcy help rebound your credit score?
It is true that bankruptcy lasts on your credit report for up to a decade, but the accounts involved in the bankruptcy will usually fall off after seven years. What’s more important, though, is that a few months after your bankruptcy discharge you can start to rebuild your credit and see it improve rapidly. Most consumers start with a secured credit card and build to unsecured.
As a note, if your debt dilemma leads to an auto repossession or foreclosure of your home, potential lenders see those as just as bad as a bankruptcy. The bottom line is if you can’t afford to pay your bills and there are still years and years left until they fall off your score, a North Carolina bankruptcy may be a better solution than continuing with the debt haunting you.
Every circumstance is different – you need the expert advice of an experienced bankruptcy attorney to help decide what’s most beneficial to you. Contact the Law Offices of John T. Orcutt for a free consultation today. Call +1-919-646-2654 to get an appointment at one of our offices in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.