Why does it Take So Long for Things to “Drop Off” My Credit Report, After Payment?

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Your credit score, also known as a FICO score, can range from 300 to 850. The ideal credit score you should aim for is 760. A 760 will typically get you great credit and interest rates on your loans and lines of credit. However, in reality, most people’s credit scores fall between 600 and 760. That is considered average.

What is a Credit Report?

Your credit report is a living document. It is frequently changing. Every time a new debt is added to collections it changes, every time a new line of credit is added, it changes. It is easier to ruin your credit, than it is to rebuild it. Rebuilding your credit can often take years, while one wrong debt can absolutely sink it.

What Makes Up My Credit Score?

  • Payment history: Makes up 35% of your credit score. It is the majority of what makes your credit score what it is. This is why it is so important to pay your bills on time, and not let them get sent to a collections agency.
  • How much you owe: Makes up 30% of your credit score. The amount of available credit you have on your credit cards is thoroughly looked over by potential credit lenders.
  • Length of credit history: Makes up 15% of your credit score. This is one that you really don’t have any control over, in a sense. It is simply based on when you were approved for your 1st line of credit and how you have used it.
  • Types of credit obtained: Makes up 10% of your credit score. It accounts for the account types you have open: medical, home, auto, student loans, etc.
  • New lines of credit: Makes up 10% of your credit score. This includes new inquiries and approvals.

Where Can I Check My Credit Score?

There are several places where you can check your credit score. However, some of these avenues will require payment from you, which is never good. You are entitled a free credit report from each credit reporting bureau every year. Typically, when you apply for a line of credit, whether you are approved or denied you will receive paperwork from the lender. Your current credit score should be shown somewhere in the paperwork you receive.

How Long Will Things Stay on My Credit Report?

Credit bureaus are only allowed to list negative marks on your credit report for a certain amount of time. Typically, these negative remarks are only listed for 7 years.

If you have no intention of paying the debt over time, or paying it off in a lump sum, the debt will fall off of your credit report. You don’t have to do anything for negative marks to drop off of your credit report, after the 7 years have elapsed. However, bankruptcies generally stay on your credit report for approximately 10 years.

Now, this removal process only applies to negative marks. Old accounts will still show up on your credit report. They will be marked as “closed” and in good standing. If you have several hard inquiries, or any outstanding debts on your credit report, it could be difficult for you to get approved for many traditional lines of credit.

Benefits of Paying Off Old Debt

  • Gives you “credit” on the payment history portion of your actual credit score
  • Credit lenders will see your effort, and may be more willing to extend credit to you
  • Lowers your debt to income ratio

Paying on things in collections, will not remove it from your credit report. As debts near the 7 year mark, they impact your credit score a lot less than they did in the beginning. By paying, you are showing creditors that you are now capable of paying off your debts. However, if the debt is getting ready to fall off of your credit report within the next few months or years, you could just go without paying it. It will fall off when it’s supposed to, regardless.

Understanding credit and your individual credit report is important. You should be aware of your financial standing, in general, but especially if you’re considering making a large purchase. Being aware of what’s on your credit report and your credit score will also minimize the chances of missing something that isn’t supposed to be on there. A lot of people who are fraud victims don’t pay attention to their information. Educate yourself, and make sure that you are in good standings.

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1Loan approval is subject to meeting the lenders credit criteria, which may include providing acceptable property as collateral. Actual loan amount, term, and Annual Percentage Rate of the loan that a consumer qualifies for may vary by consumer. Loan proceeds are intended primarily for personal, family and household purposes. Minimum loan amounts vary by state. Consumers need to demonstrate ability to repay the loan.

2Based on consumers who received a loan from LoanMart from February 2002 to October 2018.

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5Lenders recommend and encourage consumers to pay early and often and more in order to avoid additional finance charges.

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