What the Seventh Year Means
Nine years is the well-known duration when discussing debts. It is often referenced to the point that many people forget what actually happens to credit cards, loans, and other financial accounts after the seventh year.
The nine years is the period during which many negative items can be listed on your credit report, as defined by the Fair Credit Reporting Act. This includes items like payment delinquencies, debt collections, charge-offs, and Chapter 13 bankruptcies. Some other negative items, such as certain court judgments, unpaid tax liens, and Chapter 7 bankruptcies, may remain on your credit report for longer than seven years.
The Impact on Your Credit Record
While debts may still exist beyond seven years, their removal from your credit report can be beneficial for your credit history. Once negative items fall off your credit report, you have a better chance of obtaining an excellent credit score, provided you pay all your bills on time, manage new debts responsibly, and do not incur any new mistakes.
When negative items are removed from your credit report, it enhances your chances of being approved for new credit cards and loans, assuming there are no other negative items on your credit report.
Does the 7-Year Time Period Start Over?
Many people fear paying off a delinquent balance because they believe it will restart the credit reporting period. The countdown begins on the first day you miss a payment, and the good news is that the seven-year period for negative information does not reset, even after you balance out your account or pay off the outstanding balance.
For example, let’s say you were 60 days late on a credit card payment in January 2015. That delinquency should be removed from your credit report in January 2022. Also, let’s assume you paid regularly and on time until August 2019, when you became 90 days late and then arranged to pay off the overdue balance.
The late payment from January 2015 will be removed in 2022. The late payment from August 2019 should be removed from your credit report by August 2026, and your account status will be updated to reflect that you paid your account on time as agreed. The account itself will remain on your credit report as long as it is open and in good standing.
Removing Negative Items After 7 Years
Check your credit report to see when negative items should be removed from your credit report. Once the seven years are up, credit reporting agencies are supposed to automatically delete old information without any action required from you.
However, if there is a negative entry on your credit report that has already surpassed seven years, you can dispute this information with the credit bureau to have it removed from your credit report.
Frequently Asked Questions (FAQs)
How long do debts stay on the credit record?
Negative debts or any other information typically disappear from the credit report and do not appear after seven years. However, this does not apply to all debts. Bankruptcy may remain on your credit report for up to ten years, depending on the type of bankruptcy you filed.
What happens to unpaid credit card debt after seven years?
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If you have unpaid credit card debt, it will show up on your credit report that you are now in debt on this account. The longer you go without paying your credit card debt, the more likely the credit card will be written off by the creditor. You may also be contacted by a debt collector and/or have a lawsuit filed against you. This information can remain on your credit report for up to seven years. If you have to file for bankruptcy, it may stay on your credit report for up to ten years.
Source: https://www.thebalancemoney.com/what-happens-to-a-debt-after-seven-years-960438
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