How Long Does Information Remain On A Credit Report?

A question I am often asked by Borrowers who have negative items reporting on their Credit Report is How Long Does Information Remain On A Credit Report?  How long information remains on a Credit Report is a major concern for Borrowers with credit issues, because some of the items on the Credit Report are beyond their ability to correct.  In those situations the Borrower will need to wait until the item is no longer being reported on their Credit Report before they can qualify for a mortgage.

The three negative items which tend to show up the most on Credit Reports are:

• Judgments
• Collections
• Late Payments

Borrowers can't do anything about past late payments, and all they can do is to make sure they do not go late again.  Judgments and Collections are another issue, because they can pay them off so they will stop having a negative impact on their Credit Score.  However, some of the Judgments and Collections I see on Credit Reports for Borrowers with major credit issues are substantial.  It is not unusual for these Borrowers to have a combination of Judgments and Collections upward of $10,000 to $20,000.

An example of a sizable Collection would be a repossessed car.  Even though the car will be re-sold by the creditor, the creditor will still list the full remaining balance as the Collection amount.  The remaining balance on a repossessed car can easily be over $10,000.  When a Borrower has a Collection this substantial, it is not unusual for them to also have several other Collections as well.  Even if the Collection Company is willing to settle for 50% of the amount owned, they will most of the time not settle unless the Borrower is able to pay them the agreed upon amount in one lump sum.  If the Collection is substantial most Borrowers do not have enough funds to do that.

Another reason why Borrowers ask How Long Does Information Remain On A Credit Report? is because they do not want to payoff the Judgment or Collection if they are close to the time which they will drop-off the Credit Report without payment.  Depending on what the Judgment or Collection is, and length of time they have had it, we will discus the time periods in the chart below.

The best thing to do is to just pay everything off, but when Borrowers do not have sufficient funds to do so, the above chart is very useful in determining what Judgments or Collections should be paid-off first, and which ones are close enough to coming off on their own which should either be paid last or not at all.  I am a firm believer if you own a debt, then you need to pay the debt.  So I do not ever suggest a Borrower not payoff their Collections or Judgments on their Credit Report, not paying them will be a decision they need to reach on their own.  However, I do have an obligation to provide the information in the above chart when it is requested by a Borrower who wants to know How Long Does Information Remain On A Credit Report?

My next blog will be on how a Borrower can remove a Judgment, Collection, or Late Payment that is being reported incorrectly on their Credit Report.

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum,# Haddam,# East Haddam,# Chester,# Deep River, and# Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com