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Credit score and credit report are quite important nowadays. Whether you want to take a personal loan, a car loan, or a home loan, you need them everywhere. Banks determine whether to give you a loan or a credit card based on your credit score and credit report. It becomes difficult to get a loan due to negative information in the credit report. Today, we will talk about this and tell you for how long negative information stays on your credit report.

First, let’s understand what a credit score and a credit report are. The credit score is a three-digit number that indicates your creditworthiness, i.e., your ability to repay debt. On the other hand, a credit report is a detailed summary of your financial figures, showing your credit history, outstanding debt, credit card usage, and track record of debt repayment, among other things. Credit bureaus use your credit report to generate your credit score.

Separate Credit Score:

Different credit bureaus like TransUnion CIBIL, Equifax, Experian prepare their respective credit scores. The CIBIL score from TransUnion CIBIL is the most widely accepted. The CIBIL score ranges from 300 to 900. Whereas in Equifax and Experian, the credit score range is between 300 and 850. Generally, a CIBIL score above 700 is considered good, and many banks consider a score above 750 as good.

When you apply for a loan or a credit card in a bank, the bank asks for your credit report and credit score from the credit bureau. The credit report helps the bank understand how many loans or credit cards you have, whether their payments are made on time or not. If there is a delay in paying the installments of old loans, if any outstanding is settled, then these flaws are recorded in the credit report for a long time. Now let’s find out how long it takes for these flaws to be removed from the report.

Generally, flaws remain on your credit report for up to 7 years. However, the duration of the flaw can be shorter or longer depending on the type of flaw.

For example, if you are late in making a payment, i.e., you cannot make the payment by the due date, then this information is recorded in your CIBIL and other credit reports for 7 years. According to the credit bureau Equifax, information about late payment remains even after paying off old debts.

Default information

Similarly, if you have defaulted on loan or credit card payments, this information is also visible on your credit report for up to 7 years from the date of the first default. Similarly, the information about settling a loan without paying the full outstanding amount also remains recorded in the report for 7 years.

Information about bankruptcies and court judgments also remains on your credit report for seven years. According to the Equifax credit bureau’s website, information related to bankruptcy remains on your Equifax credit report for 7 to 10 years, depending on the type of bankruptcy.

When you apply for a new loan, the bank requests your credit report from the credit bureau. This is considered a hard inquiry. A hard inquiry stays on your credit report for 2 years. However, its negative impact on your credit score lasts only for one year.

Negative information such as late payments or defaults may remain on your credit report for a long time, but its impact on your credit score decreases over time. As soon as you start exhibiting positive credit behavior, such as making timely payments, paying in full, and responsibly using credit, your credit score starts to improve gradually. Having a good credit score also benefits customers with lower interest rates. Before lending, banks consider various factors, one of which is credit score and credit report. You can check your CIBIL score and download your credit report for free on the CIBIL website Cibil.com.