How Long Do Derogatory Marks Stay on Your Credit Report?
Coryanne Hicks is a personal finance writer and ghostwriter, and formerly a representative at Fidelity Investments. In addition to articles, Hicks has ghostwritten whitepapers and financial guidebooks for dozens of industry professionals. Her U.S. News & World Report video series on how to start investing at any age won an honorable mention at the 2019 Folio: Eddie & Ozzie awards for best Consumer How-To video. She was also a 2019 SABEW Goldschmidt fellow for business journalists.
A poor credit score can make a lot of things harder. It can make borrowing difficult or more expensive. It can even cause your insurance premiums to rise or make it harder to rent an apartment.
Derogatory marks typically stay on your credit reports for seven years, but some may cast their shadow for up to 10 years. Here’s what to expect if you have negative credit events dragging your score down.
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Types of derogatory marks
Derogatory marks come in many forms and with varying degrees of severity, but none of them stay on your credit report forever. The Fair Credit Reporting Act dictates how long each type of derogatory remark stays on your credit report, and the general rule is that most derogatory marks stay there for seven years.
| Type of derogatory mark | How long it remains on your credit report |
|---|---|
| Late payments | Seven years |
| Charged-off accounts | Seven years |
| Collection accounts | Seven years |
| Medical debt | Seven years |
| Bankruptcy | Chapter 7: 10 years Chapter 13: Seven years |
| Hard inquiries | Two years |
| Foreclosure | Seven years |
| Repossession | Seven years |
| Debt settlement | Seven years |
| Student loan default | Seven years |
1. Late payments
Payments are considered late if they aren’t made within 30 days of the due date. The more payments you miss, the blacker the mark on your credit and the longer it’ll take your credit score to recover. These negative items will linger on your credit report for up to seven years from the date of the delinquency. And unfortunately, you can’t just get rid of it by closing the account.
The negative impact of a late payment will be greatest when it’s fresh and strongest for people with high credit scores. In fact, a single missed payment can cause your score to drop by as many as 180 points. As time passes, the impact to your credit score will decrease, but it’s still good to take action sooner rather than later.
Once seven years has passed from the date of delinquency, check your credit report to be sure the derogatory mark has been removed. If it hasn’t, you can file a dispute with the relevant credit bureau to have the error removed.
2. Charged-off accounts
A charged-off account is one that the credit card company or lender writes off as a loss. Your account may be charged off even if you’ve been making payments if those payments are below the monthly minimum. If the debt is charged off and sold to a debt collection agency, you’ll receive two separate derogatory marks: one for the charged-off account and one for the collections activity.
Charged-off accounts will stay on your credit report for up to seven years. Once your account has reached this point, not even paying the debt in full will get it off your credit report, although it may help reduce the negative impact.
3. Collection accounts
Collection accounts are charged-off accounts that the lender has sold to a collections agency. This usually happens after you’ve missed a few months of payments or failed to pay the minimum balance. Debt in collections will remain there until you either pay it off, you’re sued or the statute of limitations on debt runs out.
You’re still obligated to pay the debt even if it goes to collections, although you’ll need to make those payments directly to the debt collector. You can expect the negative item to stay on your credit report for up to seven years from the date of your first missed payment.
4. Medical debt
Medical debt affects nearly one in four Americans, affecting consumers across all demographics. In fact, a 2022 CFPB report found that there is at least $88 billion in outstanding medical debt. If you’ve got medical debt weighing your credit score down, you’re not alone.
The good news is that the major credit bureaus have changed the way they report medical debt. In 2022, Equifax, Experian and Transunion announced that medical debt that’s been paid in full will no longer appear on consumer credit reports.
Beginning in 2023, medical collections accounts under $500 will no longer appear on your credit report. You’ll also have one year to pay your overdue accounts before they show up on your credit report. After that, medical debt can remain on your credit report for up to seven years.
5. Bankruptcy
There are several types of bankruptcy, but only two typically affect individual consumers: Chapter 7 and Chapter 13.
In Chapter 7 bankruptcy, also called “liquidation bankruptcy,” you’ll generally have to sell some of your assets to pay the debt. Chapter 7 will remain on your credit report for up to 10 years from the date you filed, although the impact lessens with time. A bankruptcy filed one year ago will have a stronger impact than one that’s four years old.
In Chapter 13 bankruptcy, you usually get to keep your assets and instead set up a three- to five-year repayment plan. This form of bankruptcy is generally referred to as the “wage earner’s plan” because it’s designed for people who have regular income and can commit to a structured payment plan. Since you’ll have repaid your debt within five years, Chapter 13 bankruptcies only stay on your credit report for only up to seven years.
6. Hard inquiries
Hard credit inquiries occur when a lender requests a copy of your credit report because you’ve applied for credit, rather than the limited information they receive with soft inquiries for preapproval offers. Hard inquiries will appear on your credit report and can impact your credit score. Note that your score will not be affected when you review your own credit report.
Hard inquiries can stay on your report for two years, although they usually stop affecting your credit score after one year. If you’re rate shopping for a home or auto loan and submit multiple applications within a certain period of time — usually 14 to 45 days — they’ll generally be counted as only one hard inquiry.
7. Foreclosure
Foreclosure occurs when a lender takes possession of your home after you’ve missed several payments on your mortgage. These painful events stay on your credit report for seven years from the date of your first missed mortgage payment and are often considered second only to bankruptcy in the damage they can do to your credit score.
A short sale, which happens when the lender removes the lien on your home so you can sell it, also negatively impacts your credit and will stay on your credit for seven years.
8. Repossession
Car repossession is like foreclosure — if you fall too far behind on your auto loan payments, your lender can seize your vehicle. There’s no legal guideline on how long lenders must wait before repossessing your property, although in the case of vehicles, repossession typically happens after 90 days of missed payments. The lender doesn’t need to give you notice of impending repossession, so it’s important to keep up to date on your debts.
Not only will your credit take a hit from missed payments, but the repossession event will linger on your credit report for up to seven years.
9. Debt settlement
With debt settlement, a lender agrees to accept less than full repayment. This is recorded as a negative item on your credit report because you didn’t pay back everything you owed and will remain on your credit report for seven years from the first missed payment. Settled debt is still better than an account that remains past due and in collections, so if you can’t repay a debt in full, it’s often better to settle than to do nothing at all.
10. Student loan default
When you miss a payment on your student loan, the loan is considered delinquent. After 90 days of missed payments, your lender will report the delinquency to the major credit bureaus. After 270 days of missed payments, federal student loans are considered to be in default. Private student loan rules vary, but it may take fewer missed payments for a private lender to trigger default.
The good news for student loan borrowers is that the U.S. Department of Education has stopped collections of defaulted loans due to the COVID-19 pandemic. As long as the moratorium remains active, no additional student loans will fall into default.
However, if you defaulted on your student loans before the moratorium, the derogatory mark will remain on your credit report. There will be no collections efforts or garnishments, and further interest accrual will be paused, but the default will likely still impact your credit score. Student loan default can remain on your report for up to seven years from the date of your first missed payment.
How to dispute inaccurate information
Mistakes can happen, even on credit reports. The good news is that you can have inaccurate information removed from your credit report, which is why it’s important to check your credit report regularly. Start by requesting free copies of your credit reports from AnnualCreditReport.com.
If you identify a mistake on your credit report, it’s important to address it right away to prevent it from negatively impacting your credit score. This page provides an in-depth explanation of how to dispute inaccurate information on your credit report.
How much does a derogatory mark affect your credit score?
The degree to which a negative credit event affects your score depends on the type of derogatory mark. A hard inquiry may drop your credit score by five points or less, while a payment that’s 90 days late may cost you up to 180 points. More severe negative items like bankruptcy can drop your score by even more.
How much a derogatory mark affects your credit score will also depend on what your score was to begin with. Negative items generally have a greater impact on higher scores than lower ones. For example, if your credit score is 680, bankruptcy could drop it by 130 to 150 points. Meanwhile, someone with a 780 credit score could lose over 200 points while someone with a score under 500 may only lose 50 points.
How to rebuild your credit score after a derogatory mark
The best way to improve your credit score after a derogatory mark is to focus on responsible credit usage going forward. Pay your bills and debts on time and aim to keep your credit utilization below 30%. Good behavior won’t remove a derogatory mark, but focusing on what you can control by practicing healthy financial habits can go a long way toward reducing the negative impact of derogatory marks.