As a child, you probably didn’t put much thought into your future credit score, if any at all. But when you turned 18, all that probably changed. Suddenly, you’re shopping out auto loans, considering getting your first credit card, and hunting for an apartment or house to rent. Sure, you could have survived with no or bad credit, but it’s not cheap.
As a general rule, it’s very important to establish a good credit score because you’ll save hundreds, if not thousands and your financial life will be a lot easier than if you had bad credit. Let’s consider some of the benefits of having good credit:
- Low-interest rates on credit cards
- Low-interest rates on auto loans
- Low-interest rates on mortgages
- Low-interest rates on loans
- More negotiating power
- Better auto insurance rates
- Cellphone contracts without security deposits
- Avoid having to pay security deposits on utilities
- Approval for higher credit card limits
- Easier acceptance for apartments and rental homes
While it’s great to build good credit, sometimes consumers have the best intentions but the unexpected happens and their good credit takes a turn for the worse. This often happens when someone loses their job, their hours are cut and they can’t afford their monthly expenses, they become disabled, they’re injured at work, they have to take care of an injured or sick loved one, they fall ill, or they go through a divorce.
When Good Credit Turns Bad
If your credit has gotten worse because of circumstances out of your control, you may be wondering, “How long does negative information stay on my credit report?” Here’s what you need to know:
- Late payments will stay on your credit report for 7 years
- A Chapter 7 bankruptcy will stay on your credit report for 10 years
- A Chapter 13 bankruptcy will stay on your credit report for 7 years
- Foreclosures stay on credit reports for 7 years
- Collections generally last about 7 years, but it depends on the age of the debt
- Public records are reported for 7 years
Even though negative information is reported on your credit report for roughly 7 to 10 years, as a rule, the older the debt, the less impact it has on your credit score. If you’re interested in learning how bankruptcy may help you rebuild your credit faster, please contact our firm for a consultation by calling (717) 559-0271 today.