How long does a red mark appear on the credit report | How long does a red mark appear on the credit report? Achi-News

Credit score and credit report are quite important these days. Whether you want to take a personal loan, car loan or home loan, you need them everywhere. Banks decide whether to give you a loan or credit card based on your credit score and credit report. It’s hard to get a loan Due to negative information on your credit report Today, we’re going to talk about this and tell you how long negative information stays on your credit report.

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

Separate credit score:

Various credit bureaus such as TransUnion CIBIL, Equifax, Experian prepare their credit scores. CIBIL score from TransUnion CIBIL is most acceptable. CIBIL score ranges from 300 to 900. While at 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 credit card at the bank, the bank requests your credit report and your 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 payments of old loans, if any amount is repaid, these defects are recorded on the credit report for a long time. Now let’s find out how long it takes for these defects to be removed from the report.

Usually, blemishes stay on your credit report for up to 7 years. However, the duration of the defect can be shorter or longer depending on the type of defect.

For example, if you are late in making a payment, meaning 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, the information about a late payment remains even after paying off old debts.

Default information

Similarly, if not loan or credit card payments, this information is also visible on your credit report for up to 7 years from the date of first default. Similarly, the information on loan settlement without payment of the full amount remains recorded in the report for 7 years.

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

When applying for a new loan, the bank requests your credit report from the credit bureau. This is considered a difficult investigation. A hard inquiry stays on your credit report for two years. However, its negative impact on your credit score only lasts 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 diminishes over time. Once you start demonstrating positive credit behavior, such as making payments on time, paying in full, and using credit responsibly, your credit score begins to gradually improve. A good credit score also benefits customers with lower interest rates. Before the loans, the banks take into account various factors, one of which is the credit score and the credit report. You can check your CIBIL score and download your credit report for free on the CIBIL website Cibil.com.

Published: March 29, 2024, 2:23 PM IST