When you make a credit mistake, you want to know how long that negative mark might affect your credit reports and what you can do to get past the damage.
How any of the 11 missteps below might affect you depends on your unique credit profile. Keep in mind that three major credit reporting bureaus — Equifax, Experian and TransUnion — track your use of credit. Rival scoring companies FICO and VantageScore then use that data to create many varieties of credit scores.
You can keep it simple, though: If you’re trying to restore your credit after a misstep, pick one score source and check it regularly. FICO and VantageScore weigh the same factors in similar ways, so they usually move in tandem.
A number of personal finance websites, including NerdWallet, offer a free credit score and free credit report information.
1. Missed payments
Falling behind on a bill is never good. If you are at least 30 days late, expect a mark on your credit record. Delinquencies typically stay on your credit reports for seven years. The later the payment, the greater the damage to your credit scores.
What to do: Pay up as soon as you can. If you’ve never or rarely been late before, you might be able to get the creditor to drop the late fee. Call the customer service number, explain your oversight and ask if the fee can be removed.
The negative effect on your credit scores will fade over time. Stay on top of all your payments so positive information in your credit reports dilutes the effect of this misstep.
2. High credit utilization
A high credit utilization — using too much of your credit limit — only has to sting for about 30 days. That’s because credit card issuers send balance updates to the three major credit bureaus once a month.
What to do: If you pay down your balance before the next time your creditor reports to the bureaus, the new information will replace the old and your scores will no longer reflect high credit usage. In general, it’s smart to use less than 30% of your credit limit; the lower, the better.
3. Applying for too much credit
Applying for credit when you need it isn’t a bad thing. However, a hard inquiry on your credit is made every time you apply for new credit, and it will stay on your reports for about two years. The good news: Any dip in your scores is temporary and likely to fade after six months.
What to do: If you’ve already lost points because of credit applications, wait for your scores to bounce back. Then, apply only for credit you’re confident you’ll qualify for. (Note: Checking your own credit does not affect your scores.)
4. Account charge-off
If you don’t pay your debt as agreed, your lender may eventually give up and charge the account off. The charge-off will appear on your credit reports for seven years.
What to do: Try to pay off the debt or negotiate a settlement. While this won’t get the charge-off removed from your credit reports, it’ll remove the risk that you’ll be sued over the debt.
If you don’t pay for an item as agreed, the lender can come and get it, often without warning. A repossession will stay on your credit reports for seven years after the account was first reported late.
What to do: Keep all other bills up to date. Positive information such as on-time payments, along with the passage of time, can start to mitigate the damage to your credit.
A creditor that’s not seeing payment may send or sell the debt to a debt collector. Having an account in collections is a serious negative that stays on your credit reports for seven years.
What to do: Make a plan to pay off the collection once you verify that the collection agency actually owns the debt. That won’t get the mark off your credit reports, but it’ll remove the risk you could be sued.
Like other negative marks, the damage fades over time if you don’t add other mistakes on top of it. Paid-off collections factor into FICO 8 credit scores, the ones most widely used in lending decisions. But some newer credit scoring models, such as VantageScore 3.0 and the FICO 9, ignore paid collections.
7. Student loan delinquency or default
Late student loan payments can start to hurt your credit after 30 days for private student loans and 90 days for federal student loans, and those delinquencies stay on your credit report for seven years.
Federal student loans go into default if you don’t make a payment for 270 days. And the government has strong debt-collection powers: It can garnish your wages, Social Security benefits or tax refunds. With private student loans, your lender can term you in default as soon as you’re late, but it has to take you to court before it can force repayment.
What to do: If you’ve paid late but haven’t defaulted, consider switching to an income-driven repayment plan, putting your loan in deferment or forbearance, or asking your lender for a modified payment plan.
If you’ve defaulted on your federal student loans, the government offers three options: Repayment, rehabilitation and consolidation.
How long a personal bankruptcy stays on your credit reports depends on which type you file. A Chapter 7 bankruptcy will stay on your reports for 10 years. Chapter 13 bankruptcy sticks around for seven years.
What to do: Begin to re-establish credit. A secured credit card or a credit-builder loan can help people build credit when they can’t qualify for unsecured credit. And note that credit scores can rebound from bankruptcy sooner than you may think.
If you fail to make payments on your home and the bank seizes it, the foreclosure will be reported to the credit bureaus and the mark will stay on your credit reports for seven years.
What to do: Keep your other credit lines open and pay them on time. You want to build up all the positive payment information you can. Note that the waiting period after foreclosure is shorter than in the past, so keep polishing your credit and you could re-enter the housing market sooner than you expected.
10. Tax lien
If you don’t pay your taxes, the federal, state or local government can file a lien against your property. That gives it a legal claim to the property that won’t be released until you pay up.
Not all tax liens will show up on credit reports. As of July 1, 2017, the three U.S. credit bureaus will not include tax liens with insufficient identifying information. But if the lien against you meets the standards for inclusion, it will be on your credit reports for seven years if it’s paid and up to 10 years if unpaid.
What to do: Pay the tax bill, if you can. The government has very effective tools to recover owed money, such as liens and withholding tax refunds, so it’s likely you will pay in some fashion. Once the lien is paid, you may be able to petition to have it taken off your credit reports early.
11. Civil judgment
If a judge in a civil suit rules against you, it’s not likely the damages you owe will show up on your reports. As with tax liens, as of July 1, 2017, the three major U.S. credit bureaus will not include civil judgments unless they meet higher standards for identifying information. The change could mean the vast majority of judgments will not be reported — some estimates run as high as 96%.
What to do: Even if the judgment does not show up on your credit reports, you still must pay it. A judgment lets the creditor garnish your wages, but you do have some options and legal rights, including limits on how much can be taken at one time.
Updated June 27, 2017.