Credit reports keep a detailed record of your credit history, and lenders use them to gauge your creditworthiness. The information on your credit report can help you determine your chances for credit or lending approval, how much you might pay in insurance premiums and whether a potential landlord will approve your rental application.
A credit report is a detailed record of your financial history, specifically your borrowing habits. A report card of sorts, lenders and other financial institutions use the information in your credit report to assess your ability to manage loans and repay debt. This information helps them make informed decisions about whether to extend credit to you.
Everyone who opens a credit account has a personal credit file that documents their financial history over time. And so long as you continue to use credit in any of its various forms, your credit file will stay open and active.
Your credit report includes the following information:
A charge-off is when a lender or creditor deems your account a total loss and closes the account to future charges. A creditor may charge off an account if you’re delinquent on your payments for a certain time, selling your debt to a debt buyer or collection agency. You’re still legally obligated to pay the debt, and this negative status can stay on your credit report for up to seven years.
Closed accounts can stay on your credit report for up to 10 years, while negative information, such as late payments or collections, can stay on your credit report for up to seven years. The Fair Credit Reporting Act limits the time a credit reporting agency can report negative items in your credit file.(1) Neutral or positive items can appear on your report indefinitely if the account remains open and active.
The exact amount of time that specific types of credit information can remain on your credit history varies by the type of listing.(2)(3)(4)
| Type of listing | How long it can remain on your report |
|---|---|
| Payment history | Up to 7 years for negative history, including late payments Positive payment history can remain indefinitely if the account is open and active, while closed accounts with positive activity can remain for up to 10 years |
| Credit inquiries | Up to 2 years for hard inquiries |
| Court judgments | Up to 7 years or until the statute of limitations runs out, whichever is longer |
| Bankruptcy | 10 years from date filed for Chapter 7 or 11 7 years from date filed for Chapter 13 |
| Collection accounts | 7 years from first date past due |
Credit reports are important measures of your reliability as a borrower. Creditors and lenders access your credit file to determine whether it’s favorable to extend credit to you. Insurance companies use it to assess your financial risk and set your policy rates. Potential employers may pull your credit report, with your consent, as part of the hiring process, while potential landlords and property managers may use it to screen tenants.
It’s important to review your credit report at least once a year for inaccuracies and outdated information and to help you better understand your current credit standing. According to a study conducted by the Federal Trade Commission, one in five people has an error on at least one of their credit reports. Something as simple as removing outdated collections from your credit report could improve your credit score and ability to get new lines of credit.
Your credit file is a lifelong record as long as you continue to use credit, so take the time to understand it and keep it clear of errors. A healthy credit report leads to a better credit score and, thus, more favorable rates and terms.
Aside from yourself, the Fair Credit Reporting Act stipulates that a consumer reporting agency may provide information about you only to people with “a legally permissible purpose to obtain a report.”(5)
The following individuals and organizations can pull your credit report for legally permissible reasons:
While you can get an official credit report from one of the three major credit bureaus — Equifax, Experian and TransUnion — you can also get a free credit report through AnnualCreditReport.com by providing your full name, contact information, Social Security number and date of birth.
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