The effects of a delinquent account
When you pay late or find yourself on the receiving end of debt collection, these incidents may remain part of your credit history for up to 10 years. Which is why paying off a delinquent account does not automatically remove it from your credit report.
Your payment history represents around 35% of your credit score. The decisions you make now could impact you into the future. That is why it is so important to pay attention to good credit habits now, including paying your bills on time.
Typically, negative information lingers on a credit report for seven years. For large credit hits, like bankruptcy, the info may remain on your report for 10 years.
What can you do?
Those rough patches do not have to define you, credit-wise. Here are some steps that can help wipe your slate clean:
- Pay off your loans and revolving debt. Once you pay off loans or credit cards, they are marked as “paid” on your report, which is considered an advantage and usually increases your credit score.
- Watch how you use your credit. Your “credit availability to credit usage” ratio is also a major factor for lenders when considering your credit status.
- Always pay on time. If your payments have all been on time in the years since your account delinquency, lenders will see that you have improved your habits, and they will take that into consideration when determining loan interest rates.
Recovering from payment missteps takes time. Just remember that it pays to stay on top of payment schedules, and to talk to an advisor if you are struggling to make payments on time.
For more tips on how to stay on top of your credit score, download our free e-book, The Building Blocks of Credit and the My Credit Repair Action Plan worksheet.
