Good news: Those negative marks on your credit report aren’t a life sentence.

3 minute read

Do you want to improve your credit score but feel overwhelmed at the enormity of the task? When you have poor or fair credit, those negative marks on your credit report that drag your score down may feel like a permanent part of your life. The good news is, they’re not.

In fact, several items on our credit report that factor into your credit score can improve or drop off with the passage of time. Meanwhile, there are things you can do right now to help ensure that when the time is right, your credit report will look good to credit card companies and other lenders.

Find out why time is on your side when it comes to improving your credit score.

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1. Late payments and collections

Around 90% of lenders use the FICO score for credit approval, terms and interest rates, according to Fair Isaac Corporation (FICO). Since payment history accounts for around 35% of your credit score or FICO score, information about payments more than 30 or 60 days late on your credit report will likely keep your FICO score at a lower number.

Payment history is the biggest factor in determining your credit score, so it’s a good thing that late payments automatically drop off seven years after the date of your last payment on a past-due account. So, don’t let a poor payment history deter you from improving your credit.

Seven years will pass before you know it, and if you have more than one late payment reported, each one that drops off could boost your credit score. In the meantime, make all payments on time to build an excellent payment history that will be enhanced as negative payment information disappears from your report.

Find out: What Happens When My Account Goes to Collections?

2. Bankruptcy

When you file bankruptcy, your credit score will probably take a big hit. However, that bankruptcy won’t stain your credit report forever. Still, depending on which kind of bankruptcy you file, the bankruptcy could stay on your report for up to ten years.

If you file Chapter 7 bankruptcy, where unsecured debt – credit cards, for example – is wiped out or discharged, the bankruptcy will remain on your credit report for ten years, according to major credit bureau Experian. If you file Chapter 13 bankruptcy, which allows you to keep paying your debt for years with a portion discharged, a Chapter 13 bankruptcy drops off your credit report after seven years.

Seven or ten years may seem like a long time, but in the big scheme of your long life, it’s just a blip. So, use those years to make timely payments on all accounts and rebuild your credit with a secured credit card if necessary. Then your credit will be in a great place when that bankruptcy on your report is automatically deleted.

Find out: How Often Can You File Bankruptcy and What Happens When You File Twice?

3. Charge-off debts

A charge-off entry on your credit report appears when a creditor finally gives up trying to collect a debt you didn’t pay. Just because the debt shows as a charge-off doesn’t mean you’re off the hook for paying, though. The creditor may sell your debt to a collection agency that will come after you for payment.

When you have a charge-off on your credit report, it’s a “serious, negative event,” according to Experian. A charge-off can lower your credit score and scare away lenders and credit card issuers. Like the rest of your payment history, however, a charge-off automatically drops off your credit report after seven years.

When that happens, if you’ve made all payments on time for years and kept your credit utilization rate – the ratio of your unsecured debt to available credit – under 30%, your credit score can improve.

Find out: What Should I Do If I Made a Mistake While Disputing Charge-Offs?

4. Length of credit history

Generally, the longer your credit history, the better your credit and FICO scores. That’s because the length of your credit history makes up about 15% of your score. So, in a few years, that fairly new account will be more established. Before you know it, you’ll have accounts on your credit report that have been open for years and have a positive impact on your credit score.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

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