How Negative Items Impact Your Credit Report and Your Score

If you have negative items on your report, you're probably worried about how it impacts your score. There's nothing you can do to make it magically disappear, but you might find it comforting to know that the negative impact on your credit score decreases as time goes by.

Here's a rundown of the most common negative items and the length of time they stay on your report.

You lost your home due to a foreclosure

This can occur when someone who has a mortgaged property doesn't keep up with the mortgage payments. The lender takes ownership and then it becomes a bank-owned property.

All negative items carry some angst along with them, but a foreclosure can be especially painful thing. Not just from a financial health standpoint but also from an emotional one since a foreclosure is often the result of difficult circumstances. For instance, during the Great Recession, some homeowners simply walked away from their homes because they owed more than the home was worth. Other reasons for foreclosures include unemployment and divorce.

Length of time on your report: Seven years.

Impact on credit report: According to, if you do a good job meeting your financial obligations, your FICO score will start to rebound after about two years.

You experienced a bankruptcy

There are two types of bankruptcy that are most common with consumers. A Chapter 13 bankruptcy involves a "reorganization" and it doesn't free you from all your debts. But there are other benefits, such as the ability to keep your property. In some cases, a consumer makes too much money to qualify for a Chapter 7 bankruptcy, so the default approach is the Chapter 13 filing.

A Chapter 7 bankruptcy is a "liquidation" bankruptcy and it wipes out your unsecured debts, such as credit cards and medical bills. But you do not get to keep your property. You have to take a Bankruptcy Means test to determine if you're eligible for a Chapter 7 bankruptcy. This test reviews your income and expenses. To qualify for a Chapter 7, your test results have to fit within specific guidelines.

Length of time on your report: A Chapter 13 bankruptcy stays on your credit report for seven years. But a Chapter 7 bankruptcy remains on your report for 10 years. A Chapter 7 allows to become basically debt-free, so it takes longer to bounce back from a Chapter 7 than it does from a Chapter 13 bankruptcy.

Impact on credit report: A bankruptcy, like other negative items, have the most impact on your score during the first year after it occurs. This will cause a big drop in your credit score, but honestly, your focus at first should be on getting your financial life back together and paying all of your remaining bills on time.

You made late payments

If you make a late payment, the issuer often reports it to the bureaus. Now, all late payments are not created equal. FICO scores consider the severity of the lateness when the score is calculated. This means that a payment that's 60 days late is not as bad as a payment that's 90 days late. So as soon as you realize you're making a late payment, spring into action immediately.

Most credit card issuers will report your account as delinquent if you fail to pay the minimum amount due for two straight billing periods. However, don't test this and assume you can be late for one month. Pay your bill on time very single month because it takes a long time to get this off your credit report.

Length of time on your report: A late payment stays on your report for seven years. That might seem harsh, but think about how much weight the FICO score gives to payment history. It makes up 35 percent of your score. So really, making on-time payments is essential for a healthy score.

Impact on credit report: The FICO score algorithm considers how late the payments are when the score is calculated. According to, the score uses this criteria: how recent the late payments are, how severe the late payments are, and how frequently the late payments occur.

Here's one strategy to consider: If this is a one-time thing and you still have excellent credit, call the issuer, explain what happened and why it will never happen again, and ask if they can remove this from your report. But if this is an ongoing issue, don't expect that call to succeed.

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