How long does it take for your credit to clear?

Question

When I was 18 I got 2 credit cards, each with a $200 limit. I ran them up and never payed them off because I lost my job shortly afterwards. By the time I got around to being able to pay them off, I owed over $1000 on one of them and a little over $200 on the other. Both of the debts have been closed out (?) but are hey going to just go away or will i have to pay them before they'll clear off my credit?

Answer 1

I know a lot about your situation, but I had over 30 cards and credit lines. Your situation seems to be pretty simple to me!

You have a lot of control on these 2 accounts under new Federal legislation. The other answer stated the statutory law, 7 years. However, that's not the entire story. After a couple years your card accounts were sold off in the "3rd market." That means, you are not hearing from the original issuer. You may be getting phone calls from a "collection agency," but they are a different company name. That name may, in fact, change over time as one collection agency "sells" the account to another collection agency at a still lower price. It's important to know these defaulted accounts never sell at 100 cents on the dollar. After 3-4 years the accounts are changing hands for 5-20 cents on the dollar. This fact sets up a settlement plan. You could probably settle the smaller account for 15% of the amount they claim (that's an educated guess). The other one, maybe 20% of the amount they claim ($400?). As part of your settlement talk, you make it clear that you agree to settle subject to their sending a letter stating that the account has been "paid as agreed" or "paid in accordance with its terms." That letter lets you write the 3 credit bureaus to say the account was paid and the collection should be removed. I have personally settled about 8 accounts in this manner. You only have two!

Lastly, the credit agency only reports what is reported to them by a reporting card company. When an account is sold in the 3rd market, the original company loses interest quickly. They have received some cash for the account and move on. Often the collection company does not report at all. So, you can pull a free credit report to see what is being reported by whom. Your question didn't say you looked at your credit report recently. I suggest you do that.

Answer 2

According to the FCRA, it takes 7 years + 180 days from the date of 1st delinquency. For example, let's say you took out a loan 1/1/2000 but never made a payment. 6/1/2000 the account is charged off, and can remain until 6/1/2007. That's just an example but the charge offs affect your score less and less over time.

Best thing to do is open a secured credit card and start building good credit. Believe it or not that's far more important than paying old debts, especially if they are over 3-4 years old.

Answer 3

Derogatory information can stay on your credit report for UP TO 7 years, that doesn't necessarily imply that it will. However, most people have some form of negative info on their files so you are not alone. What future creditors will look for is your track record since the last negative report. Have you opened up new credit? Have you payed your bills on time? Do you have any collection activity? These are things they look for. What really matters is your credit score, that's the ultimate barometer of your credit worthiness, not that you made msitakes in the past. It's what you have done since then. Even if you ahve damaged your credit your score can improve tremendously and within a realtively short time span if you use credit responsibly.

Answer 4

credit checks go back seven years. Anything prior to that lill not show. Depending on when the credit card company finalized the account, you'll be btween 25 - 27 before your credit will be zero. then you'll go from bad credit to no credit.

Answer 5

debts will stay on your credit reort for up to 7 years.