Backward payments can remain in your credit report for up to seven years. However, the impact of backward payments will decrease over time, even before that deadline, if constantly making time payments and manages its debt effectively. In this article, we explain the seven -year rule and the steps you can take to rebuild your credit.
Key control
- Backward payments remain in their credit report for seven years, but their negative impact can decrease over time.
- Your credit score can decrease significantly if you lose payment in 30 days and can immerse yourself more abruptly after 60 and then 90 days.
- Derogative information, such as backward payments and criminal accounts, remains in your credit report for seven years.
- You can repair your credit score making time payments, reducing debt and building a positive credit history with new accounts.
The negative effects of late payments decrease over time
Its payment history constitutes 35% of its FICO score. Therefore, it is not surprising that late payments can have a significant negative effect on their credit score. Although it tends to vary, the impact is often greater if it has a higher score. That is because you have more to lose.
In some cases, creditors will not inform the payment so late until 30 full days arrives late. If you are only a few days late, you may be charged a backward rate, but you are probable not to end in your credit report. But in general, you can find that:
- Reasoned 30 -day payments: You can reduce your score by 100 points or more, depending on your credit history
- Backward payments of 60 days: negative effect more serious than 30 days late
- Backward payments of 90 days: negative effect more serious than 60 days late
The backward payments informed to the Credit Office remain in their credit report for seven years. But the complete negative effect does not persist all the time. The negative effect of backward payments decreases over time: if you make regular payments on time and use the credit in a responsible manner, you will see that your credit score is recovered long before the seven -year brand.
Advice
See your credit report regularly to obtain errors and report them. You can get a free credit report every week of each of the three credit reports visiting Annualcreditreport.com, or you can keep eyelashes on your own and obtain alerts with a credit monitoring service.
What is the seven -year rule?
The seven -year rule refers to the period of time that certain types of negative or derogatory information remain in their credit report. Articles covered by the seven -year rule include:
- Backward payments in any of your credit accounts, such as loans, mortgages or credit cards
- Any account that has gone to collections
- Chapter 13 Banking (chapter 7 bankruptcies remains in credit reports for 10 years)
The negative information remains in your credit report from the original date it occurred. For example, if a payment was lost on June 1, 2020, it will remain in your credit report until June 1, 2027.
Important
If an incorrectly late payment was reported in your credit report, you present a dispute to the credit offices and the financial institution. Be sure to include copies of your bank extract, confirmation of payment or canceled check, which show that you made the payment in time.
How to accelerate the credit repair process
You can rebuild your credit even if you have backward payments that drag your credit score. Managing your credit in a responsible manner, borrowing only what you need and not spending too much can help you avoid financial challenges that can lead to credit problems.
Other ways in which you can improve your credit include:
- Pay on time: If you cannot pay the total amount of the debt, make at least minimum payments on the expiration date or before to ensure that payments on time are displayed in your credit report.
- Pay the debt: Reduce your pending debt paying your balances if possible, especially those with the highest balances. And do not open any new account.
- Keep open accounts: Do not close any of your old accounts, even if you don’t use them, since you can help reduce your credit use ratio and keep your high credit score. The exception here is whether you are paying an annual rate and no longer wants the account, or is dealing with problems that would force him to close the account.
- Active construction credit: Consider a credit builder loan to help improve your credit demonstrating payments on time on time.
- Become an authorized user: Ask someone with an excellent loan to add it as an authorized user in one of their accounts. However, be sure to use the account in a responsible manner, otherwise you can harm your credit.
The reconstruction of your credit will take time, but with patience and diligence, you can return to the track. If you need help, consider working with a non -profit credit advice agency.
The final result
Backward payments can negatively affect your credit history. They remain in their credit report for seven years, although their impact begins to decrease over time. However, if you work to improve your credit using the advice described above, you can begin to rebuild your score more quickly than you think.
