Negative Information on Credit Reports
The length of time information takes to come off a personal credit report generally ranges from two to 10 years or indefinitely if the account remains open. However, that doesn't mean it will impact your credit score for that long, and if a negative report is inaccurate, you have a right to dispute it with the credit bureaus.
How Long Information Stays on Personal Credit Reports
Type of Information Time
Open accounts in good standing Indefinitely
Closed accounts in good standing 10 years from the closure date
Chapter 7 bankruptcy 10 years from the filing date
Chapter 11 bankruptcy 10 years from the filing date
Chapter 13 bankruptcy 7 years from the filing date
Collection accounts 7 years from the original delinquency
Late or missed payments 7 years from the original delinquency
Default, including foreclosure, repossession and settlement 7 years from the original delinquency
Hard credit inquiries 2 years from the date of the inquiry
If a derogatory credit item on your credit report is accurate and verifiable, there is no way to remove it from your reports.
However, if you find something on your credit report that's incorrect, you have the right to file a dispute with each credit bureau that lists the inaccurate information on your report.
Each credit bureau has its own dispute process.
Provide the reason for your dispute and any documentation you have to support your claim. Once you submit it, the credit bureau will typically resolve it within 30 days and either verify, correct or remove the information, depending on the results of the investigation.
Business credit scores normally range from a low of zero to a high of 100 unlike FICO scores that run from low of 350 to a high of 850.
Negative credit can do more than prevent someone from obtaining credit or forcing a borrower to pay a higher interest rate. Bad credit can cost an applicant for a job to be rejected. Approximately half of all employers in the United States now run credit checks and routinely reject applicants with poor credit. Not all information on a credit report is available to employers. Employers must obtain an applicant's consent to check their credit.
Joint Credit
Joint credit is credit issued to two or more individuals based upon their combined income, net worths, and overall credit profiles and history. It involves shared financial responsibility. Joint credit provides greater access and higher borrowing limits. Most, but not all, joint credit involves two people co-signing a mortgage or partners signing commercial bank loan documents. Having joint credit means all borrowers will have equal access to the account, including access to any line of credits. Not all joint credit or loan documents are the same so they must be reviewed and understood by all parties. The individuals signing joint loan documents should protect themselves by entering into an agreement among or between themselves.
Piggybacking
Piggybacking is when a person becomes an authorized user on another person's credit card for the purpose of boosting their credit score. This is not to be confused with being a joint account holder. The difference between the two is that authorized users are not legally responsible for charges made on the credit card, whereas joint account holders are.
The authorized user gets the full account history reflected on their credit report. They will get credit information including the payment history, the age of the account and the utilization rate. When these characteristics are positive, they can help to raise an authorized user's credit score. If they are not positive, the authorized user risks lowering their own score.
Lending Circles
Creating and participating in a lending circle is a way to establish and enhance the credit score of each participating member. This assumes the organization provides the required reports to one or more credit reporting agencies. A lending circle exists when each member of a group contributes a fixed amount of money each month into a pool. After a certain number of months, one person collects the entire pool. The pool is replenished and the pooling of funds continues. The recipient rotates. No interest is paid on the contributions or payouts. Participants' timely payments can be reported helping them to build a positive credit history. Lending circles are utilized mostly by people needing to improve their credit scores, new immigrants with no credit history, and young people just getting started.
Credit Circles - Credit Information Sharing
A credit circle is created when members of a common group come together to share information on credit related matters of the clients or customers, such as late payments or defaults. Credit circles help businesses minimize risk and prevent losses. Many apartment associations have sponsored credit circles where apartment building owners and property managers report their experience with tenants.
Private Money - Private Money Lenders
Private money refers to loans made to individuals, companies, and other entities by non-institutional individuals or private lenders. These loans normally carry higher interest rates than institutional loans made by banks, credit unions, and insurance companies because these institutional lenders generally have more stringent underwriting requirements. Private money lenders generally rely more on the asset value of collateral and less on the credit rating and/or the cash flow or income of the borrower.
Compensating Factors
Compensating factors are borrower financial strengths such as high credit scores, large down payments, significant cash reserves, or minimal debt, that lenders often use to offset risks like low income or high debt-to-income (DTI) ratios. They are critical for mortgage approvals (especially FHA and VA loans) when a borrower's profile is borderline. Other compensating factors may include self-employed income not used to qualify the applicant and over-time income that does not count as qualifying income.
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