When Do Late Payments Get Reported to the Credit Bureaus?

Maintaining a good credit score is essential if you live in the United States. If you have a credit card, auto loan, or home loan, you and you made your patement late, you might be wondering when do late payments get reported to the credit reporting bureaus? We will answer this question in much detail below.

When Do Late Payments Get Reported to the Credit Bureaus?

Late payments get reported to the credit reporting bureaus only if you're payment is 30 or more days past due. Once your account is past due for 30 or more days, you will not know when the payment is reported as paste due because different creditors and lenders report to the credit reporting bureaus at different times. As such, there is no definite date when your late payment will be reported to the credit reporting bureaus. But a good rule of thumb is to wait 60 days for the late payment to be reported to the credit bureaus.

Impact of Late Payments on Your Credit Score

You should avoid making a payment that's more than 30 days late at all costs. A single late payment can lower your credit score by more than 150 points. The better your credit score, the bigger the drop you will experience. If you already have poor credit, a late payment will still lower your credit score but not more than someone with a good or excellent credit score.

That said, if you're 30 days late on your payment, you should try to make the payment even though you're late. This is so because if you become 60 days, 90 days, or 120 days late, these negative marks will be added to your credit report. The more late you become on making your payments, the more damage you will cause to your credit.

Late payments will remain on your credit report for 7 years from the date you first became delinquent on making payments on your account. For example, if you missed a payment on January 1st, 2022, the late payment will remain on your credit report until January 1st, 2029.

After 7 years, late payments will automatically be removed from your credit report. Having said that, as the late payment ages, its impact on your credit score will lessen until it's ultimately removed from your credit report.

Now that you know that late payments are only reported once a person is 30 or more days late if you're less than 30 days late, you should try to make your payment to save your credit. For example, if you're only 1 to 29 days late, you still have an opportunity to make your payment before any damage occurs to your credit.

What Happens If You Make a Late Payment?

If you make a late payment on your credit card, personal loan, car loan, or home loan, a negative mark will be added to your credit report after the lender reports that you've been 30 or more days late on making your payment.

In addition to having a negative mark added to your credit report, your lender will most likley charge you late payments fees for every payment that you miss. Additionally, if your late on making a credit card payment, a penalty APR may kick in raising the interest that you pay on the amount you owe them.

If you have money and are able to pay your loan or credit card, you should pay them as nonpayment comes with many consequences that will make paying back the money that you owe more difficult and more expensive.

If you're a month or two late, you should ask your card issuer or lender to waive the late fees in exchange for you making the account current. Many lenders will be willing to work with you because it's better for them if you continue to make payments on your account.

In the event that you're not able to make your account current, you should ask your lender about the options that you have instead of just ignoring the past due amount and racking up a ton of late fees and additional charges. Some lenders may be able to push a payment or two back or even place you on a payment plan where are pay a lesser amount that's due.

How Long Does a Late Payment Stay On Your Credit Report?

A payment that is reported as late will remain on your credit report for 7 years from the date you missed the payment. After 7 years, the payment will be automatically removed from your credit report. In the event that your late payment is not removed within the 7 year period, you can file a dispute with the credit bureau reporting the late payment to have it removed from your credit report.

Disputing Incorrect Information On Your Credit Report

If a late payment shows up on your credit report even though you were never late in making payments on your account, you should either contact the lender reporting the incorrect information or you can file a dispute with the credit reporting bureau that's reporting the incorrect information.

For example, if you have a late payment showing up on your Transunion Credit Report, you should dispute the late payment with Transunion to have it removed from your credit report.

Also, if the account is reported late with the two remaining credit reporting bureaus, you should file a dispute with each of them, as well. Filing a dispute with only one bureau will correct only that credit report. You must file a dispute with each of the credit reporting bureaus reporting the incorrect information.

After you have filed a dispute, the credit reporting bureaus will conduct an investigation to determine whether the information is indeed incorrect. If the investigation reveals that you are right and the info is incorrect, they will remove it from your credit reporting bureaus. It usually takes the credit reporting bureaus a maximum of 30 days to conduct the investigation, but usually, the credit bureaus finish much more soon than that.

What Should You Do If Your Payment is Late?

If you're under 29 days late on making your payment, you should try to make the payment if you can. This is so because if your payment is under 30 days late, paying it will prevent your creditor and lender from reporting the payment as late. Payments are only reported as late when they are 30 days or more late.

Also, if you're more than 30 days late, you should still try to make your payment because if your payment is 60 days, 90 days, or 120 days late a 60, 90, or 120-day late mark will be added to your credit report reflecting how long you've been late on making your payment. The longer that you leave an account unpaid, the more damage you'll be doing to your credit.

Credit Score Planet Frequently Asked Questions (FAQs)

1. How are late payments reported to the credit reporting bureaus?

Late payment are reported to the credit bureaus by your lender or creditor. For example, if you have a credit card with Wells Fargo and you're 31 days late on making your payment, Wells Fargo will report your late payment to the credit reporting bureaus according to their own reporting schedule.

2. How long will a 30-day late payment affect your credit score?

A 30-day late payment will affect your credit score for 7 years from the date you were late. That said, the impact a late payment has on your credit report will lessen as the late payment mark ages.

3. How much can a late payment lower your credit score?

A single 30 day late payment can lower your credit score by as much as 180 points. So, it's best to avoid one if you can.

4. Does a 3 or 5-day late payment affect your credit?

No, a payment that is less than 30 days late will not affect your credit score because late payments are only reported as late if it is 30 days or more late.

5. Will a 1-day late payment affect your credit score?

No, a 1 day late payment will not affect your credit score because a 1 day late are not reported. Only payments that are 30 or more days late are reported to the credit reporting bureaus.


Does Financing a Phone Build Credit?

Smartphone prices around the world are always increasing, making purchasing a cell phone in cash difficult. so, if you're like many people in the United States, you've probably considered financing a phone. We often get asked: Does financing a phone build credit? We will answer this question in much detail below.

Does Financing a Phone Build Credit?

In most cases, financing a phone through a wireless carrier will not help you build credit. When you finance a phone, your account status is not reported to the credit reporting bureaus. Therefore, whether you make your payments on time or don't make them at all, they will not be reported to the credit reporting bureaus and will therefore not affect your credit.

That said, with some phone makers, such as Samsung and Apple, financing a phone with them directly may help you build credit, so if you make your payments on time, you will build good credit.

This is so because when you finance a phone through Apple or Samsung, they are essentially opening a line of credit for you, which is usually reported to the credit reporting bureaus as would a credit card. In such a situation, making payments to finance a smartphone will help you build credit so long as you make your payments on time.

Financing a Smartphone With a Wireless Carrier

When you purchase a cellphone or smartphone and agree to a payment plan with a wireless carrier, such as AT&T, T-Mobile, Sprint, or Verizon, your phone payments will not help you build credit because phone payments and bills are not reported to the credit reporting bureaus, so if you think that making phone payments will help your credit, you're mistaken as they will not help your credit. The same applies if you miss payments. If you miss payments, the missed payments will not affect your credit as your account is not reported to the credit reporting bureaus.

Financing a Smartphone With Apple

If you want to finance an iPhone or any apple product with Apple, Apple will open a credit card through which you can finance your phone. The Apple Card is reported to the credit reporting bureaus. So, making payments on an iPhone will help you build credit. If you miss any payments, you could cause significant damage to your credit. This is so because the status of your Apple Card is reported to the three major credit reporting bureaus. As such, your payment history will affect your credit score.

Does Financing a Phone Affect Your Credit?

When you first open a wireless account or apply to lease or finance a smartphone, the wireless carrier may conduct a credit check. That said, wireless carriers often conduct what is known as a soft pull or soft inquiry to review your credit when determining whether to allow you to finance or lease a phone. A soft inquiry does not affect your credit score, as such, it will not lower your credit score.

That said, if you're financing a phone directly with Apple or Samsung, a hard inquiry may be placed on your credit report. This is so because Apple and Samsung open a line of credit for you to allow you to finance one of their smartphones. A line of credit almost always results in a hard inquiry on your credit report.

A single hard inquiry could lower your credit score by a few points, but the impact is negligible and shouldn't keep you up at night.

Also, if you finance a smartphone through Apple or Samsung, missing a payment could hurt your credit score because the status of your line of credit account is reported to the credit reporting bureaus. As such, if you make payments, you will build credit, and if you miss payments, you will damage your credit.

Does Paying Your Phone Bill Build Credit

Now that you know that leasing or financing a phone with a wireless carrier does not build credit nor does it affect your credit, does paying your phone bill build credit? No, paying a phone bill will not help you build credit. That said, Experian has launched a service known as Experian Boost that allows you to improve your credit score whenever you pay your phone bill. However, a phone bill will not affect your credit unless you subscribe to Experian's service. Also, paying or failing to pay a phone bill will not affect your credit score with Transunion and/or Equifax.

Other Ways to Build Credit

If you're just starting to build your credit or you have bad credit, one of the best ways to build credit is to obtain a secured credit card. A secured credit card works the same way as does a regular credit card, the only difference between the two is that with a secured credit card, you will have to place a security deposit with the card issuer.

If you use the secured card as agreed, the security deposit will usually be returned to you within 12 to 18 months. However, if you stop making your payments on time, the security deposit will be used to satisfy your outstanding balance.

That said, if used properly, a secured credit card will help build your credit just as would a regular unsecured credit card.

So, if you want to build credit without financing a phone to build credit, a secured credit card is a great way to do so.

Credit Score Planet Frequently Asked Questions

1. Will financing a smartphone help my credit?

Financing a smartphone or any phone through a wireless carrier will not help your credit because your account status is not reported to the credit reporting bureaus. However, if you finance a smartphone through Samsung or Apple, making payments on your phone could help your credit because they typically open a line of credit on which you make payments.

2. Does paying a phone bill help your credit?

No, paying a phone bill will not help your credit. However, if you signup for Experian Boost, paying your phone bill could help your credit. That said, generally speaking, paying a phone bill will not help your credit.

3. How can I improve my credit score?

You can improve your credit score by making payments on your loans and credit cards on time, reducing the balances on your accounts, keeping old accounts open, and refraining from submitting too many credit applications within a short period of time.

4. Can a phone company ruin your credit?

Yes, a phone company or wireless can ruin your credit. The way this typically happens is that if you leave an unpaid balance on your account for too long, the phone company may sell the unpaid debt to a collection agency. The collection agency will then add a collection account to your credit report while attempting to recover the debt. A single collection that's added to your credit report can cause significant damage to your credit.


Will Disputing Items On Credit Report Hurt My Credit Score?

If you're like many Americans and you have uncovered an error on your credit report, you may be thinking about disputing the error to have it removed from your credit report. So, does disputing an inaccurate item on your credit report hurt your credit score? We will explain this in much detail below.

Will Disputing Items On Credit Report Hurt My Credit Score?

No, disputing any inaccurate or incorrect items on your credit report will not hurt your credit score even if the dispute is unsuccessful. That said, if the negative item that you're disputing on your credit report is removed, the removal will raise your credit score. So, if you find an inaccurate item on your credit report, you should not hesitate to dispute it.

For example, if you disputed a collection account that does not belong to you and the dispute results in the removal of the collection account, you will see a significant boost in your credit score, especially if you had a high credit score, to begin with.

However, if the item you disputed is not removed from your credit report, you will see no change in your credit score as it will remain the same.

The same applies if you are able to successfully remove a late payment, charge off, an account settled for less than the full balance and any other derogatory mark that may appear on your credit report.

That said, removal of or correction of inaccurate information, such as the misspelling of your name or an incorrect address with neither hurt nor help your credit score because it's not the type of information that's factored into your credit score.

In most situations, a dispute will take 30 days to complete a dispute from the date that you filed it. Once your dispute is processed and the investigation is completed, the credit reporting bureau with witch you filed your dispute will inform you about the status of the dispute.

So, now that you know that disputing an item on your credit report will not hurt your credit score, how long does a negative item stay on your credit report.

How Long Does a Negative Item Stay On Your Credit Report?

A negative mark, such as a late payment, foreclosure, or repossession will stay on your credit report for 7 years from the date that you first became delinquent on making payments on your account. For example, if you failed to pay a credit card bill that was due on January 1st, 2022, a late payment notice will remain on your credit report until January 1st, 2029.

After 7 years, the mark will be automatically removed from your credit report. If for any reason, the negative mark is not removed after 7 years of appearing on your credit report, you should file a dispute with the credit reporting bureau reporting the negative information and asking them to remove it. After you've made the request, the credit reporting bureau will conduct an investigation, and if they find that the derogatory mark has expired, they will remove it from your credit report.

The best thing to ensure that a derogatory mark is not added to your credit report is to always make your credit, loan, and other bill payments on time. This ensures that you do not owe anyone money and that your credit report remains free of derogatory marks.

How to Dispute an Item on Your Credit Report?

Before disputing an item on your credit report, you need to pull all three of your credit report. You should then examine your credit reports to find any incorrect or derogatory information.

If you find negative information that is incorrect or does not belong to you, you should dispute it with the credit reporting bureau reporting the inaccurate information.

For example, if you review your Transunion credit report and you find a collection account that does not belong to you or a late payment where you were not late, you should file a dispute with Transunion.

Each of the three major credit reporting bureaus (Transunion, Equifax, and Experian) offer consumers the ability to file dispute for free online.

Just follow the instructions that they've provided to submit your dispute.

After submitting a dispute, the credit reporting bureaus have 30 days to conduct an investigation to verify the accuracy of the information you've disputed.

If the credit reporting bureaus conclude that your claim is correct and the information that's being reported is incorrect or does not belong to you, they will remove it from your credit report.

How Will the Results of Your Dispute Affect Your Credit Score?

If you have disputed a derogatory mark (negative item), such as a late payment, or collection that does not belong to you, the removal of such an item will likely result in a significant boost to your credit score, so long as no other negative information is dragging down your credit score.

However, if your dispute is not successful and the credit reporting bureau decides not to remove the derogatory information because they've concluded that it's valid, there will be no impact on your credit score, meaning your credit score will not go down merely because you filed a dispute and were unsuccessful in removing the negative item from your credit report.

So, if you believe that there is inaccurate or negative information on your credit report, you will not lose anything from filing a dispute in an attempt to have it removed.

Items That Are Usually Disputed On a Person's Credit Report

Here are some of the most commonly found errors that you can dispute on your credit report:

  • Your closed account still being reported as open
  • An account that does not belong to you being reported on your credit report
  • An account that appear as being paid late when you've paid on time
  • A collection account that does not belong to you appearing on your credit report
  • Incorrect information, such as the wrong name, address, or phone number on your credit report
  • The same account being listed twice on your credit report
  • Incorrect installment account or credit card balance being reported
  • Incorrect credit limit being reported
  • An account that appears on your credit report due to fraud committed by another

Will Disputing an Item on My Credit Report Work?

Disputing a valid item on your credit report is unlikely to remove it from your credit report. This is so because when you file a dispute, the credit reporting with which you filed a dispute will conduct an investigation to determine whether the item you've disputed is valid or invalid. If the investigators find that the information contains inaccurate or incorrect information, the item you've disputed will be removed from your credit report. However, if the investigation reveals that the item is indeed valid, it will remain on your credit report. Disputing an item on your credit report will not hurt your credit score. However, if you're successful in disputing negative information, you could see a boost in your credit score.

Are You Required To Dispute an Item With All Three Credit Reporting Bureaus?

You will only need to file a dispute with the credit reporting bureau reporting the negative information. For example, if a negative item that does not belong to you appears on your Transunion Credit Report, you will only need to file a dispute with Transunion. However, if an item, for example, appears on your Transunion and Experian Credit Reports, you will need to file a dispute with both credit reporting bureaus.


Credit Report vs Credit Score (Difference Explained)

If you lived in the United States for any period of time and you're over the age of 18, you've probably heard of the terms credit report and credit score. Many use these terms interchangeable, but there is a big difference between the two. We will explain the difference between your credit report vs credit score in much detail below.

Credit Report vs Credit Score (Difference Explained)

Your credit report and your credit score are two different things. Your credit report contains information about your credit cards and loans. This information is compiled by the three major credit reporting bureaus (Transunion, Equifax, and Experian) and includes your payment history, the number of open accounts that you have, and the balances on your accounts. Your credit score, on the other hand, is a number that's calculated using the information contained with your credit report. Your credit score offers creditors and lenders with a mean to evaluate your creditworthiness.

So, you should be aware that your credit report does not contain your credit score. Your credit report only contains information, such as your open accounts, closed accounts, your payment history, your account status, the balances on your accounts, and any negative information, such as missed payments, charge offs, repossessions, and foreclosures.

In the United States, there are three major credit reporting bureaus (Transunion, Equifax, and Experian) to which your account information is reported. Creditors and lenders typically choose one to two lenders and they report your account status to them.

The information contained in your credit report is often different from one credit reporting bureau to another. This is so because creditors and lenders often only report to only one or two of the credit reporting bureaus and not all three of them.

Your credit score depends on the information contained in your credit report. The more positive information in your credit report, the better your credit score will be. If you have negative information in your credit report, your credit score will be lower.

Your credit score is calculated by applying a mathematical algorithm to the information contained within your credit report. The most popular scoring algorithm that's used to calculate credit score is the FICO Score Model. Under this model, you are assigned a credit score that ranges from a low of 300 to a high of 850.

The better and more positive the information in your credit report, the higher your credit score will be. The higher your credit score, the more creditworthy you will be. The better your creditworthiness, the more likely you are to be approved for the credit cards and loans that you apply for and the better the terms and interest rate will be.

The FICO credit reporting model is not the only model available, there are other models that offer consumers credit scores, such as VantageScore. The same logic applies with each model, the higher your credit score, the better your creditworthiness.

All credit scoring models measure you creditworthiness by assessing the following factors:

  • Payment history (35% of your credit score)
  • Account balances / Credit utilization (30% of your credit score)
  • Age of your accounts (15% of your credit score)
  • How many credit applications you've submitted / hard inquiries (10% of your credit score)
  • Credit Mix (diversity of your accounts) (10% of your credit score)

All scoring models look at the same factors, but assign different weight to each of the factors just listed.

So long as you use credit responsibly and make all of your payments on time, your credit report will have positive information and you will have a good credit score. However, if you miss even one payment and have negative information on your credit report, your credit score will suffer.

Why Are Your Credit Report and Credit Score Important?

Having a credit report that has positive information and a good credit score are essential to be approved for things, such as opening a credit card, renting an apartment, taking out a mortgage to buy a home, and financing or leasing a car.

Whenever you apply for any form of credit, your creditor or lender will look at the information in your credit report to ensure that you are someone who has demonstrated the ability to borrow money and repay it on time. The better the information in your credit report, the better the terms and the interest rate you will qualify for.

The same logic applies to having a good credit score. This is so because those who have a high credit score have demonstrated responsible borrowing and repayment. Creditors are more likely to approve those who have a high credit score because they present a lower chance of defaulting on their monetary obligations. The higher your credit score, the better the odds of your approval, and the better the terms and interest rate you will qualify for.

How To Access Your Credit Report & Credit Score?

Under Federal Law, every person in the United States has the right to access his credit report once a year for free. Annual Credit Report allows consumers to access their credit reports for free once a year. That said, Annual Credit Report does not offer consumers the ability to check their credit score, it only allows them to access the information in the credit report.

That said, there are plenty of sites on the internet that allow consumers to check their credit reports and credit scores for free, one such site is Credit Karma. You can sign up for Credit Karma for free and access your credit report and credit score without paying a single dollar.

Also, some banks, such as Bank of America and Wells Fargo, allow their customers to check their credit score free. This is done through their online banking portals where you can opt in to view your credit score.

If you don't check your credit reports, you should get into the habit of checking your credit reports periodically. When looking at your credit report, you should look for any inaccurate or incorrect information that appears on your credit report. If you find any inaccurate information, you should file a dispute with the credit reporting bureau reporting the inaccurate information. If your dispute is successful, the incorrect information will be removed from your credit report.

Also, you should check all three of your credit reports because each report will have different information since some creditors and lenders do not report your account information to all three credit reporting bureaus.

FICO Credit Score Breakdown

Your FICO credit score ranges from 300 to 850. 300 being the lowest possible credit score and 850 being the highest credit score you can achieve. The higher your credit score, the better the odds of you being approved for credit and the better the terms and interest rate will be for the account you're approved for.

Here is how your credit scores are classified:

  • 800 to 850 - Exceptional
  • 799 to 740 - Very Good
  • 739 to 670 - Good
  • 669 to 580 - Fair
  • 579 to 300 - Poor

Who Can Check Your Credit Report and Credit Score?

You are the only person who can see your credit score and you are the only person who can authorize others to view your credit score and credit report. Here are some common circumstances where you would want to authorize another person to view your credit report and credit score:

  • Applying for a credit card
  • Applying to finance or lease a car
  • Applying for a job
  • Applying for a home loan
  • Applying for a student loan
  • Applying to rent an apartment

Bottom Line

By now you should know the difference between your credit score vs credit report. You have three different credit reports from each of the major credit reporting bureaus. Each of your credit reports contains information on your credit and loan accounts. Your credit score, on the other hand, is a three digit that's calculated using a mathematical algorithm that's applied to the information found in your credit report.

Have a clean credit report and good credit score is important because it is difficult, if not impossible, to get approved for credit cards and loans without having a good credit score. If you are approved with a bad credit score, you will not qualify for good terms and you will likely pay a ton of additional money in the form of interest.

So, if you have a credit card or loan, you should make sure to make all of your payments in full and on time so that you can build good credit. Failing to make even one payment on time will cause a significant drop in your credit score.

Credit Score Planet Frequently Asked Questions

1. What is more important your credit score or credit report?

Your credit score and credit report go hand in hand. The better the information in your credit report, the better your credit score will be. So, both matter equally as much.

2. Which credit report is most accurate?

There is no credit report that is more accurate than the other. That said, some credit reports may contain more or less information depending on which of the credit report bureaus your lender or creditor reports your account status information to. For example, some lenders will report the information to all three credit reporting bureaus (Experian, Transunion, and Equifax), whereas other creditors may only choose to report to one of the credit reporting bureaus, such as only reporting to Transunion.

3. Is there a difference between credit score and credit report?

Yes, there is a difference between your credit report and credit score. Your credit report contains information about your accounts and credit history, it does not contain your credit score. Your credit score is calculated by applying an algorithm to the information contained in your credit report.

4. How can I improve my credit score?

You can improve your credit score by making all of your payments on time, paying down the balances on your accounts, keeping old accounts open, refraining from applying for too many credit cards and loans within a short period of time, and periodically checking your credit report and disputing any inaccurate information you find.


Does a Cell Phone Bill Build Credit?

If you're like almost anyone in the United States, you probably have a cell phone. We often get asked by our visitor whether paying a cell phone bill build credit? We will answer this question in much detail below.

Does a Cell Phone Bill Build Credit?

Generally, paying a cell phone or any type of phone bill will not help you build credit because cell phone providers do not report your account status to the credit reporting bureaus. Only accounts, such as credit cards, auto loans, home loans, student loans, and personal loans will help you build credit. That said, out of the three major credit reporting bureaus, Experian has created a program known as Experian Boost, which rewards consumers for making on-time payments on other bills that include cell phone bills.

Your payment history on accounts, such as credit cards and auto loans accounts for 35% of your credit score. The easiest way to build your credit is to make such payments in full and on time.

If you're making your cell phone bill payments on time, you probably want them to help your credit, but the truth is that cell phone providers do not report to the credit reporting bureaus, as such, they will not increase nor will they decrease your credit score.

Not Paying a Cell Phone Bill Could Hurt Your Credit

That said, if you do not make your cell phone bill payment on time, you can hurt your credit score. Not paying your cell phone could hurt your credit in the event that you stop making payments on your account, and the unpaid debt is sent to a collection agency.

Once your unpaid cell phone debt is sold to a collection agency, the collection agency will then attempt to collect the debt from you. If you refuse to pay the outstanding amount, the collection agency may place a collection account on your credit report.

Collection accounts that are reported to the credit reporting bureaus (Equifax, Experian, and Transunion) can reduce your credit score by up to 100 points, causing significant damage to your credit score.

A collection account will remain on your credit report for 7 years and will continue to drag your credit score down until it's removed from your credit report. After 7 years pass, the collection account will automatically be removed from your credit report.

So, although your cell phone bill and account status is not reported to the credit reporting bureaus and will not appear on your credit report, however, if you fail to make cell phone bill payments on time, you could still damage your credit.

Cell Phone Carrier Will Check Your Credit

Although cell phone carriers do not report your account status to the credit reporting bureaus, they will check your credit before opening an account for you or allowing you to finance a cell phone.

Financing a cell phone, like paying your cell phone bill, will not help you build credit because your account status and payment history are not reported to the major credit reporting bureaus. So, even though you're financing a phone (taking out a loan to purchase a cell phone), your on-time payments will not help you build credit.

Usually, when you apply to finance a cell phone, a soft inquiry is added to your credit report. Soft inquiries do not hurt your credit score, so you don't have to worry about the inquiry hurting your credit score.

That said, if you finance a phone and terminate your cell phone agreement prematurely, you will have to pay early termination fees. If you fail to pay these fees, your unpaid debt may be sold to a collection agency and the collection agency will then attempt to collect the debt from you, causing damage to your credit.

Experian Boost

If you make your cell phone bill payments on time and want your positive cell phone bill payment history to be reported to Experian, Experian offers a service known as Experian Boost, which allows consumers to build credit by allowing Experian to report their positive payment history on their Experian Credit Report.

With Experian Boost, only positive payment history is reported, so if you miss a payment on your account, the missed payment will not hurt your credit score.

Also, Experian Boost will only improve your Experian Credit Score, your other credit scores will not benefit from Experian Boost.

If you want to build your credit, there are some alternative to using Experian Boost. For example, almost everyone will qualify for a secured credit card.

With a secured credit, you'll have to place a security deposit with the card issuer, and the card issuer will typically give you a credit limit that's equivalent to the amount of security deposit you made.

Secured credit cards function the same way a regular unsecured credit card functions and will help you build your credit.

So, open a secured credit card, spend only as much as you can afford to pay at the end of each month, and make full and timely payments, and you'll be on your way to building strong credit.

Why Should You Care About Building Your Credit?

Having good credit in the United States is essential because it impact your ability to do the following things:

  1. Financing a Car - Having a good credit score is essential for purchasing a car with affordable monthly payments. The higher your credit score, the lower the interest rate on your car loan. Also, having a good credit score is essential to be approved for an auto loan in the first place.
  2. Buying a Home - Your credit score plays a role in whether you'll be approved for a home mortgage. The better your credit score, the better the odds that you'll be approved for a home loan. Also, the better your credit score, the better the interest rate you'll qualify for.
  3. Opening a credit card - Credit card issuer will only allow those who have a good credit score to open unsecured credit cards. If you have not built your credit, you will only qualify for a secured credit card, meaning you'll have to make a security deposit, which will become your credit limit. So, having good credit is essential to opening credit cards with reasonable interest rates.
  4. Renting an apartment - Some landlords consider a potential tenant's credit score prior to renting an apartment to them. This is so because persons with higher credit scores are more likely to make their rent payments on time. So, if you want your rent application to be approved, you should build good credit.
  5. Obtaining a personal loan - If you want to obtain a personal loan, you must have good credit. The better your credit score, the better your odds are for being approved for such a loan. Also, the better your credit score, the better the interest rate that you'll qualify for.
  6. Saving money on car insurance - Insurance companies take into consideration a person's credit score when setting their insurance premiums. Those who have a good credit score will qualify for better premiums because they're seen as less risky. So, build your credit to qualify for less expensive insurance premiums.
  7. Opening utility accounts - Having a good credit score will allow you to open a utility account without having to pay a deposit. However, if you don't have good credit, you may be rejected for a utility account, or if you're approved, you'll have to place a security deposit.

Credit Score Planet Frequently Asked Questions

1. Does paying a cell phone bill build credit?

No, generally paying a cell phone bill will not help you build credit. That said, Experian does offer consumers the ability to have their bills reported to Experian for a credit score boost. However, this credit boost will only help your Experian credit score.

2. What bills help build credit?

Credit card bills, auto loan payments, home loan payments, and student loan payments will help you build credit. Paying things, such as phone bills, cell phone bills, electricity bills, gym membership premiums, and water bills will not help you build credit because your payment history is not reported to the credit reporting bureaus.

3. Does financing a phone build credit?

In most cases, financing a cell phone will not help you build credit.

4. Does leasing a phone build credit?

In most cases, leasing a cell phone will not help you build credit.


How Long Does a Credit Dispute Take?

If you've noticed information or accounts that dong belong to your on your credit, you've probably filed a dispute to have the inaccurate or incorrect information removed from your credit report. So, how long does it take the credit reporting bureaus to complete a credit dispute? We will answer this question in much detail below.

How Long Does a Credit Dispute Take?

Under Federal Law, the credit reporting bureaus are required to resolve credit disputes within 30 days. That said, most credit disputes are resolved within 10 to 14 business days. The length of time it takes to resolve a disputes depends on how responsive the lender or creditor is in replying to the credit reporting bureaus to resolve the dispute.

Typically, when a person believes that there is incorrect or inaccurate information his credit report, he or she can file a dispute with the credit reporting bureaus to have the information corrected or removed from his credit report.

That said, you must contact the credit reporting displaying the incorrect or inaccurate information. For example, if a collection account that does not belong to you appears on your Experian Credit Report, you must contact Experian and dispute the collection account with to have it removed. You can file a dispute with any one of three major credit reporting bureaus (Experian, Transunion, and Equifax) online.

Upon filing a dispute, the credit reporting bureau you filed a dispute with will contact the creditor or agency furnishing the information to conduct an investigation to determine the accuracy of the information provided.

If, after the investigation, the credit reporting bureau determines that the information is incorrect, it will remove the information from your credit report. However, if it determines that the information is correct and valid, it will deny your credit dispute and keep displaying the information on your credit report.

It would help if you kept in mind that the credit reporting bureaus will only remove inaccurate information from your credit report. So, if something like a delinquent account or collection account does in fact belong to you, the credit reporting bureau will not remove it fr from your credit report.

Steps to File a Credit Dispute (Credit Dispute Process)

  1. Request a copy of your credit report - The first step that you must take before filing a dispute is to pull a copy of your credit report and review it. If you find any inaccurate information, you can proceed to dispute that information. You must be able to specify the exact information that's incorrect on your credit report.
  2. Dispute the Incorrect Information - Once you know what information is incorrect, you should proceed to find the dispute center for the credit reporting bureau displaying the incorrect information. Once at the dispute center, fill in the requested information and thoroughly explain why the specific information on your credit report is incorrect. You should include any evidence that you have. Many of our visitors have experienced errors in their account status, account balance, missed payments, collection account, or the account should have been removed from their credit report. Regardless of the reason for the dispute, the process is the same.
  3. Submit Your Dispute - Once you've filled in all of the required information and indicated what information is incorrect, you should file your dispute with the credit reporting bureau reporting the incorrect information.
  4. Wait for the Credit Reporting Bureau to Investigate - After you've submitted your dispute, it usually takes between 10 to 14 business days for the credit reporting to investigate your dispute. The processing of your dispute should not take longer than 30 days because the credit bureaus are required by law to investigate and complete dispute processing within 30 days of you filing your dispute.
  5. Result Rendered - Once the credit reporting bureau completes its investigation, it will inform you of the results. If the investigation revealed that the information is inaccurate, it will be removed from your credit report. However, if the investigation reveals that the information is accurate, the disputed information will not be removed from your credit report. That said, if the party that furnished the information that you claim is inaccurate does not respond to the credit bureau, the credit bureau has the option to remove the information. Some states mandate that the information be removed if the furnisher of the information does not reply.

Summary of How a Credit Dispute Works

Whether you filed a credit dispute with Experian, Equifax, or Transunion, the process is very similar. You provide them with your personal information, you review a copy of your credit report and select specific information to be disputed. After you file a dispute, the credit reporting bureau will reach out to the provider of information to investigate whether the information is valid or wrong. If the information proves to be wrong, it will be removed from your credit file.

What Should You Do if Your Credit Dispute is Denied?

If your dispute is denied, but you believe that it was incorrectly denied, you have the option to resubmit your dispute. That said, you should submit additional evidence and/or information to prove that the information is indeed incorrect.

The initial dispute that you make is not investigated thoroughly and usually involves an agent of the credit reporting bureau contacting the party that furnished the information to confirm whether the information is accurate.

To have a more thorough dispute performed, you should contact the credit reporting bureau and escalate your dispute so that a more thorough dispute is conducted.

You should submit as much information that can help you case as possible. This will insure that you have the best chance at succeeding in your dispute.

If you are not familiar with the dispute process, you should explore the option of hiring a credit repair service to perform the dispute on your behalf. Credit repair services usually have aggressive employees who know the ins and outs of credit disputes and so they'll offer you a better chance of successfully disputing and having the information removed from your credit report.

Check All Three of Your Credit Reports

You should check all three of your credit reports because some creditors and lenders only report to one or two of the credit reporting bureaus, so the information that each brueau may have may be different. So, check all three of your credit reports (Transunion, Experian, and Equifax) and dispute any information that's inaccurate with credit reporting bureau reporting the information.

If several bureaus are reporting the same incorrect information, you have the option of contacting the creditor or furnisher of information and ask them to remove the information from all three credit reports. However, if that does not work, you must contact each of the credit reporting bureaus and ask them to remove the incorrect info.

For example, if a collection account that does not belong to you is reported to Experian and Transunion, you must file a dispute with both credit reporting bureaus to have the information removed.

All three credit reporting bureaus offer the option to dispute information for free online. If you do not wish to do so online, you have the option of calling them to dispute the information or to do so by mail. Disputing information online is the quickest way, while disputing via mail is the slowest way.

Credit Score Planet Frequently Asked Questions

1. Can disputing information on your credit report hurt your credit score?

No, disputing negative information on your credit report will not hurt your credit. However, if the negative information that you've disputed is removed, you could see an increase in your credit score.

2. Do you have to dispute with all three of the credit reporting bureaus?

You must file a dispute with every credit reporting bureau reporting incorrect information. Removing information from one of your credit files will not remove it from your credit file with another credit reporting bureau.

3. What happens if you win a credit dispute?

Usually, if you win a credit dispute, the information you've disputed is removed from your credit report.

4. What does it mean to dispute credit?

Disputing credit is filing a dispute with the credit reporting bureaus to remove information you've specified from your credit report. Usually, negative information, such as missed payments, collection accounts, charge offs, repossession, and other negative items are disputed.

5. How long do credit disputes take?

Credit disputes can take up to 30 days. However, many disputes are resolved in under two weeks.


How Long Do Hard Inquiries Stay on Your Credit Report?

If you have applied for a credit card or loan, you may have noticed that the creditor placed a hard inquiry on your credit report. A hard inquiry, commonly known as a hard pull, is placed on a person's credit report when a lender or creditor requests a copy of your credit report to assess your creditworthiness. Hard inquiries are considered as negative items and can lower your credit score by 5 to 10 points. So, how long does a hard inquiry stay on your credit report? We will answer this question in much detail below.

How Long Do Hard Inquiries Stay on Your Credit Report?

Hard inquiries stay on your credit report for 24 months from the date that your lender or creditor requested a copy of your credit report. Once the 24 month period is over, a hard inquiry is automatically removed from your credit report. You should not apply for too many credit cards or loans within a short period of time because every time you apply for a credit card or loan, a hard inquiry is placed on your credit card. Although a single hard inquiry has a negligible impact on your credit score, racking up too many hard inquiries within a short period of time will have a substantial negative impact on your credit score.

Hard inquiries account for 10% of your credit score. The more hard inquiries you have on your credit report, the lower your credit score will be.

Racking up too many hard inquiries within a short period of time is not only bad for your credit score, but will cause creditors and lenders to view you as credit hungry and too reliant on credit. Some creditors may even deny you credit and loans if they see that you have racked up too many hard inquiries. As such, you should keep credit card and loan application to a minimum if you want to be approved for credit in the future.

Here are some examples of hard inquiries:

  • Applying for a credit card
  • Applying for an auto loan
  • Applying to finance a vehicle
  • Applying for a home loan
  • Applying for a student loan
  • Refinancing your home
  • Applying to rent some apartments or homes

How Long Do Hard Inquiries Affect Your Credit Score?

Although hard inquiries will remain on your credit report for 2 years, experts believe that they only impact your credit score for the first 12 months. After that, their impact on your credit score will begin to lessen until they're completely removed after 24 months.

That said, hard inquiries do not have a major impact on your credit score. In fact, hard inquiries only account for 10% of your credit score. Your payment history and credit utilization have a major impact on your credit score. For example, your payment history makes up 35% of your credit score and your credit utilization (how much of your available credit you're using) makes up 30% of your credit score.

So, if you want to improve your credit score, you should focus most of your efforts on making timely payments on your credit cards and loans, and lowering the balances on your credit cards and loans.

How Much Do Hard Inquiries Lower Your Credit Score?

Each hard inquiry can lower your credit score by 5 to 10 points. That said, the point drop you will experience as the result of a hard inquiry is temporary. Within a few months, the impact should begin to lessen and your credit score will eventually bounce back to what it was. If you've been making timely and complete payments on your new account, you may even notice an increase in your credit score.

For persons who have a lengthy credit history and excellent credit score, a single hard inquiry will have little to no impact on their credit score. However, if you have a fairly short credit history with very few accounts, a single hard inquiry will have a bigger impact on your credit score.

That said, the impact of a hard inquiry does not last forever. However, if you know that you'll be applying for a home loan, you should avoid applying for other loans and credit cards until you're approved for your mortgage and you close the deal on your new home.

Every point counts when you're applying for a mortgage, and the higher your credit score, the better chance you have to approved and the better the terms of your approval.

Also, some lenders will not lend you money to buy a home if you have too many hard inquiries. So, if you're applying for a home loan, you should definitely hold back on applying for other loans and credit cards.

Hard Inquiry vs Soft Inquiry

A hard inquiry is placed on your credit report whenever you apply for a loan or a credit card and a creditor requests a copy of your credit report when evaluating your ability to repay money that the lender may loan you. The better your credit score, the more likely it is that the lender will approve your request for a credit card or loan.

A soft inquiry, on the other hand, does not appear on your credit report and does not lower your credit score. Soft inquiries occur when a creditor or lender reviews your credit file for a purpose other than extending or approving you for credit.

Soft inquiries can be placed on your credit report for any of the following reasons:

  • You request a copy of your own credit report
  • Your employer requests a copy of your credit report
  • A potential landlord accesses your credit report
  • A lender or creditor accesses your credit report to pre-approve you for an offer
  • An existing lender accesses your credit report to review your credit report
  • An insurance company requests a copy of your credit report

These reasons are different than those for a hard inquiry, which typically involves a decision as to whether to approve you for a credit card or loan.

What Should You Do If There is a Hard Inquiry on Your Credit Report That Does Not Belong to You?

If you check your credit report and find a hard inquiry that does not belong to you, you have two options to have the inquiry removed. The first option is to file a dispute with the credit reporting bureau displaying the inquiry and ask them to remove it. Once you've filed a dispute, the credit reporting bureau will conduct an investigation to determine whether the inquiry belongs to you. If they find that it does not, it will be removed from your credit report.

The second option you have is to use the contact information of the person or entity that placed the hard inquiry on your credit report to contact them and explain to them that you did not apply for the credit card or loan that they claim you applied for. Some creditors and lenders are willing to remove a hard inquiry if you are not the application.

However, in the event that they're not willing to remove the hard inquiry, dispute it through the credit reporting bureau reporting the hard inquiry.

Can You Remove Hard Inquiries From Your Credit Report?

None of us want hard inquiries on your credit, but the fact that you don't want it to appear on your credit does mean that you'll be able to remove it. If the hard inquiry is valid, meaning it was placed on your credit report as a result of you apply for a credit card or loan, you will not be able to remove it from your credit report. However, hard inquiries do not last forever. In fact, a hard inquiry will only remain on your credit report for 24 months. After 24 months, it's automatically removed from your credit report and will no longer impact your credit score.

How Many Inquiries Are Too Much?

There is no specific number of inquiries that are too much. That said, some lenders will not offer you credit cards or loans if you have more than X number of inquiries. That said, experts believe that anything above 6 inquiries is too much. Experts state that this number of inquiries is too much because as the number of inquiries on a person's credit report increases, so does the likelihood that, that person will file for bankruptcy as a result of defaulting on his or her payments.

Rate Shopping

The fact that too many hard inquiries can hurt your credit score should not stop you from shopping for the best interest rate on your new loan. We say this because most credit scoring models offer you a window that ranges from 14 to 45 days during which all of the inquiries that you accumulate during this timeframe only count as one inquiry. For example, if you applied for a home mortgage with 5 different lenders who each added a hard inquiry to your credit report, your 5 inquiries would only count as 1 inquiry, which should have little impact on your credit score.

Credit Score Planet Frequently Asked Questions

1. Why did I get a hard inquiry if I was approved?

A hard inquiry is added to your credit report whether or not you're approved for a credit card or loan. A hard inquiry is added to your credit report from the mere fact that you applied for a credit card or loan and the creditor accessed your credit report to determine your creditworthiness.

2. Does a hard inquiry mean that you were denied?

No, a hard inquiry does mean that you were denied. It's added whenever you apply for a credit card or loan. A hard inquiry only means that a creditor or lender has requested a copy of your credit report.

3. Why are hard inquiries bad?

Hard inquiries are bad because they mean that you've been seeking credit or loans. Too many within a short period of time could hurt your credit score because it shows lenders and creditors that you're actively seeking to borrow money.

4. Do multiple hard inquiries count as one?

Multiple hard inquiries only count as one when you're rate shopping for a loan, such as a home loan, auto loan, or student loan. For hard inquiries to count as one hard inquiry, they must be made within a short period of time, usually 15 to 45 days.

5. How many points is a hard inquiry?

A hard inquiry usually results in a point drop of 5 to 10 points. The stronger your credit, the less point drop you will notice as a result of a hard inquiry.

6. How long does it take a hard inquiry to show up on your credit report?

A hard inquiry is placed on your credit report as soon as a party accesses your credit report to determine your creditworthiness for a credit card or loan.

7. Do hard inquiries affect buying a house?

Yes, the number of hard inquiries you have may affect your ability to buy a home because some lenders have a requirement where they will not lend money to a person to buy a home if he or she has X number of inquiries. This is different from one lender to another, so ask your lender how many hard inquiries they'd like to see on your credit report.


How Do I Dispute an Address on My Credit Report?

One day you're checking your credit report and you find an address that does not belong to you on your credit report. What are your options in this case and how do you dispute the address that does not belong to you so that it's removed from your credit report? We will discuss the answer to this question in much detail below.

How Do I Dispute an Address On My Credit Report?

If there is an address on your credit report that does not belong to you, you can dispute it by filing a dispute with the credit reporting bureau displaying the inaccurate address. You can dispute an address on your credit report online, by telephone, or by mail. For example, if Experian is showing an address that does not belong to you, you can dispute it by filing a dispute with them. That said, to successfully dispute an address on your credit report, the address must not belong to you and must not belong to someone with whom you have a joint account or you're an authorized user.

The other option to dispute an incorrect address is to contact the creditor or lender who has reported the incorrect information and ask them to remove it from your credit report. For example, if Chase is reporting an address that does not belong to you, you can contact them and ask them to remove it from your account.

That said, even if an address that does not belong to you appears on your credit report, an address will almost never impact your creditworthiness, meaning it will not lower your credit score. That said, you should have it removed to avoid any inaccurate information on your credit report.

Filing a dispute to remove an address that does not belong to you is free. This is so because the credit reporting bureaus are required by law to only report information that is complete and accurate. As such, you can file your dispute for free.

After you've filed a dispute, the credit reporting bureau will conduct an investigation to determine whether the information you've disputed is accurate or inaccurate. If the investigation reveals that the information is incorrect, it will be removed from your credit report.

After the credit reporting bureau is finished with investigating your dispute, you will be notified of the dispute results in writing by the credit reporting bureau.

If you're not already in the habit of checking your credit report, you should periodically check your credit report and dispute any inaccurate information. Oftentimes derogatory information that does not belong to you may be added to your credit report, impacting your credit score. The only way to have it removed is to dispute it through the credit reporting bureau displaying the inaccurate information.

What Information is Contained in Your Credit Report?

Your credit report contains the following information:

  • Name
  • Address (current & previous)
  • Social Security Number
  • Credit Card and Loan Account Status
  • Your payment history
  • Account balances
  • Employment history (past & current employers)
  • Income
  • Derogatory information, such as late payments, foreclosures, bankruptcies, repossession, short sale

The credit reporting bureaus compile as much information on your financial history as possible to give lenders and creditors the most accurate representation as it relates to your finances.

The information in your credit report is used for a multitude of reasons that include: assessing your creditworthiness for credit cards and loans, insurance companies, landlords and property managers, employment, purchasing a home, and renting an apartment.

Because your credit report and credit score are used in so many aspects of your life, you should strive to maintain a good credit score and maintain a credit report with as accurate information as possible. Whether you find an account or address that does not belong to you, you should dispute any inaccurate information that appears on your credit report.

How to Dispute an Incorrect Address On Your Experian Credit Report?

Here are the steps that you should take to dispute an incorrect address that appears on your Experian Credit report:

  • Sign up for a free Experian Account here
  • Access the Experian Dispute Center
  • Click start a new dispute
  • Select the information that you want to dispute
  • Add the reason for the dispute (ex. the address on your credit report does not belong to you)
  • Review the information that you've filled out
  • Submit the dispute to Experian
  • Wait for Experian to investigate the dispute
  • You'll be notified of the dispute results

Also, if you with to dispute an incorrect address, you can do so by calling Experian or disputing it via mail. The best way to dispute incorrect information and track the status of your dispute is to do so online, but the choice is for you to make.

How to Dispute an Incorrect Address On Your Transunion Credit Report?

Here are the steps that you should take to dispute an incorrect address that appears on your Transunion Credit Report:

  • Head over to the Transunion Dispute Center here
  • Click on start a dispute
  • Provide information that identifies
  • Follow the steps provided by Transunion to dispute your address
  • Submit your dispute
  • Wait a maximum of 30 days for Transunion to investigate and process your dispute
  • You will be notified by Transunion of the dispute results

How to Dispute an Incorrect Address On Your Equifax Credit Report?

Here are the steps that you should take to dispute an address that does not belong to you and appears on your Equifax Credit Report:

  • Head over to the Equifax Dispute Center here
  • Check your Equifax credit report
  • Follow the steps provided to you to file a dispute with Equifax
  • Submit your dispute to Equifax
  • Wait a maximum of 30 days for Equifax to investigate your dispute
  • You will be notified by Equifax of your dispute results

What Information Can You Dispute on Your Credit Report?

You can dispute a variety of different information that appears on your credit report. The information you can dispute includes the following information:

  • Personal information - This includes your name, date of birth, address, and social security number
  • Account information - Late payments, settled accounts, closed accounts. Any derogatory information that appears on your credit card or loans accounts can be disputed through the credit reporting bureau reporting the incorrect information
  • Information that does belong to you - If incorrect information that simply does not belong to you is being reported on your credit report, you can dispute it to have it removed from your credit file. For example, if a collection account that does not belong to you is reported on your credit file, you can dispute it to have it removed from your credit report.
  • Duplicate item - If an account or some derogatory information is being reported as two separate accounts on your credit report, you can dispute the duplicate item to have it removed from your credit report.

So, if you find an inaccurate entry on your credit report, you should immediately dispute. Approximately 20% of Americans have found errors on their credit report that were corrected by the credit reporting bureaus after the consumer disputed the item with the credit reporting bureaus. You should not leave errors on your credit report because some errors can have a negative impact on your credit score. Although an incorrect address will not lower your credit score, other errors can potentially lower it.

Old Addresses & Current Address

If you have ever pulled a copy of your credit report, you may noticed that your credit report contains both the past addresses that you've resided at, as well as your current address. Typically, once an address is reported to the credit reporting bureaus, it remains on your credit report.

The credit reporting bureaus pull addresses from the accounts that you have, such as credit card accounts, auto loans, mortgage accounts, and student loans. So, if you have ever used an address on such accounts, the credit reporting bureaus will have it.

If you change your address because you've moved, you probably changed it on your accounts, such as credit card or auto loan. After you make the change, your accounts will report the changes to the credit reporting bureaus. The bureaus keep track of your past addresses and current address.

Just because you've changed your address, does not mean that it will be removed from your credit report. Addresses will remain on your credit report indefinitely. Unlike negative information, which only remains on your credit report for seven years, your current and previous address will remain on your credit report forever.

If an address that does not belong to you appears on your credit report, you should dispute it with the credit reporting bureau. This is so because you may be a victim of fraud and someone may be attempting to open accounts using your person information. So, dispute it and have the bureaus remove it from your credit report.

Credit Score Planet Frequently Asked Questions

1. How do I get an address removed from my credit report?

You can get an incorrect or inaccurate address removed from your credit report by filing a dispute with the credit reporting bureau displaying the wrong address. That said, if the address on your credit report is accurate, you will not be able to remove it from your credit report.

2. Is it better to dispute my address online or through the mail?

The best way to dispute an address is to do so online. Disputing it online allows you to track the status of your dispute so that you're always up to date.

3. Why is the wrong address on my credit report?

There are a number of reasons as to why the wrong address appears on your credit report. These include fraud or inaccurate account information.

4. Can I remove an old address from my credit report?

You can only remove an incorrect or inaccurate address from your credit report. You can remove a correct and valid address from your credit report.


How Long Does a Short Sale Stay On Your Credit Report?

If you couldn't make payments on your home and resorted to short selling your home, you probably noticed a significant drop in your credit score due to the short sale. A short sale refers to the process of selling your home for less than what you owe to pay back your lender. So, how long does a short sale remain on your credit report? We will answer this question in much detail below.

How Long Does a Short Sale Stay On Your Credit Report?

A short sale stays on your credit report for up to seven years. A short sale can cause significant damage to your credit score, often resulting in a score drop of more than 150 points. That said, even though a short sale remains on your credit for seven years, the impact it has on your credit score will begin to lessen as the derogatory marks related to the short sale age.

Typically, when you're involved in a short sale, the short sale is not reported as a short sale, rather, it appears on your credit report as a charged-off debt, settled for less than the full amount, settled, or a deed in lieu of foreclosure. Regardless of how a short sale is reported, you probably noticed a significant drop in your credit score.

When a short sale is first reported on your credit report, you may have noticed a drop of 150 points or more in your credit score, however, you should know that as the short sale ages, its impact on your credit score will lessen.

You should notice that your credit score will begin to improve after 24 months of the negative information being reported on your credit report. That said, the biggest improvement will occur after the derogatory marks are removed from your credit report after 7 years from the date you first became delinquent on making your mortgage payments.

How Does a Short Sale Affect Your Credit?

As mentioned previously, a short sale does not appear on your credit score, but rather appears as "settled for less than the full amount." That said, people with higher credit scores typically experience bigger drops in their credit score.

For example, a person with a 780 credit score may experience a drop of 160 points in their credit score, bringing their credit score down to a 620. That said, a person with a lower credit score of 680 will likely experience a small drop in their credit score of approximately 100 points, bringing down their credit score to 580. The takeaway is that the higher your credit score, the bigger the point drop.

Also, the effect that a short sale will have on your credit report depends on whether you missed payments on your mortgage prior to your short sale. If you missed payments on your mortgage, the missed payments on your account were probably reporting to the credit reporting bureaus, dragging your credit score down. Mortgage lenders typically do not allow people to short sell their home prior to proving that they are indeed in financial distress and are therefore missing payments on their mortgage. So, the missed payments will bring your credit score down.

Also, after your card issuers see that you have a short sale on your credit report and missed payments, they may lower your credit limits because you have become a bigger risk to them, further lowering your credit score, especially if you have high credit card balances. This is so because when your credit limits are lowered, your credit utilization increase, which can cause your credit score to drop.

That said, if you missed payments on your mortgage account, the missed payments will continue to show up on your credit report and affect your credit score for seven years from the date you missed the payments. Also, the short sale notation on your credit report will remain on there for seven years from the date you became delinquent on paying your mortgage account.

How to Improve Your Credit After a Short Sale?

  1. Make your payments on time - Making all of your payments on your credit cards and loans is the best thing you can do to improve your credit score. Your payment history accounts for 35% of your credit score, so make your payments to improve your credit score. Missing a single payment could significantly hurt your credit score. If you have missed payments on your mortgage account, make sure to pay all of your other accounts on time.
  2. Reduce your credit utilization - You should keep your credit utilization below 30%. That is, you should not use more than 30% of your available credit. Keeping your credit card balances low will help you improve your credit score. If your credit utilization exceeds 30% of your available credit, it will hurt your credit score. This is the second most important factor, accounting for 30% of your credit score. So, you should take the necessary steps to lower your balances to see an improvement in your credit score.
  3. Don't apply for too many new accounts - If you want to improve your credit score, you should avoid applying for too many credit cards and loans. This is so because each time you apply for a credit card or loan, the lender will place a hard inquiry on your credit report. Although a single hard inquiry will result in a 5 to 10 point drop in your credit score, if you submit too many applications within a short period of time, the applications will result in a substantial drop in your credit score. So, only apply for the accounts that you need and check the requirements for the lender before you apply so that you're only applying for accounts that you'll be approved for.
  4. Keep old accounts open - The older the average age of all of your accounts, the better your credit score will be. The age of your accounts makes up 15% of your credit score. The credit reporting bureaus reward individuals with older accounts with a higher credit score. So, although it may be tempting to close down an old account that you barely use, keeping it open could improve your credit score, so don't close it down unless absolutely necessary.
  5. Monitor your credit - If you don't already, you should get into the habit of monitoring your credit report. This keeps you informed as to the health of your credit, as well as whether any inaccuracies appear on your credit report. If you find that there are inaccuracies or derogatory items that don't belong to you on your credit report, you should dispute them with the credit reporting bureaus displaying the inaccurate information. This keeps your credit file clean and improves your credit score.

How Long Does it Take to Improve Your Credit Score After a Short Sale?

If you have missed payments and a short sale on your credit report, your credit score will begin to improve approximately 24 months after the short sale has been added to your credit report. The biggest improvement to your credit score will occur once the short sale is removed from your credit report. Typically, a short sale will remain on your credit report for seven years from the date you first missed a payment on your mortgage account. After the seven-year period, the derogatory information will automatically be removed from your credit report and you should notice a significant improvement in your credit score.

Credit Score Planet Frequently Asked Questions

1. Can you get a short sale removed from your credit report?

You can only get a short sale removed from your credit report if there is inaccurate information about the short sale being reported on your credit report. However, absent incorrect information, it will be extremely difficult to have derogatory information related to a short sale removed from your credit report.

2. How long does it take for a short sale to be removed from your credit report?

It takes 7 years from the date you first missed a payment on your mortgage account for a short sale to be removed from your credit report. Typically, derogatory information only remains on your credit report for 7 years.

3. How bad does a short sale hurt your credit?

A short sale can cause a drop of 150 points or more in your credit score, so it's a very bad event that you should try to avoid.

4. Can you buy a house after a short sale?

Yes, you can buy a house after a short sale, but some lenders will want you to wait for at least 2 years before they can approve you for a new home loan. That said, some lenders may be willing to work with you, depending on the type of loan that you apply for and the amount of the down payment you're willing to make.

5. Why is a short sale bad?

A short sale is bad because it causes a significant drop in your credit score and places derogatory information on your credit report that will cause some lenders to avoid working with you.