Do I Have to Wait Seven Years to Get Good Credit After Problems in the Past?

Unfortunately, seven years is the time length for many kinds of negative items listed on your credit report to disappear. Late payments, charged off accounts, debt collection efforts, and Chapter 13 bankruptcy are all included in the seven years to drop off your report. Other more serious items like tax liens you have not paid, judgments, and Chapter 7 bankruptcy can stay on your report for longer than seven years.

The reason that seven years is significant is that the majority of negative reported items drop off your credit report at this point. This will not cancel the debts (if they are unpaid especially). You will still owe the debt even if it has been dropped from your credit report. 

These debt collectors, lenders, and creditors may still pursue various legal means to collect these debts that are no longer listed. They can send letters, call you, or garnish wages with court permission. Some states allow creditors to sue to collect a debt for longer than seven years, according to the state’s statute of limitations. 

You can engage a credit repair firm or debt lawyer to help challenge negative items on your personal credit report. If they are successful in getting these items overturned, then the negative items on your report will be dropped when the matter is resolved instead of over seven years. 

What Is Credit Counselling?

If you feel like you need additional help in managing your finances and debt, credit counselling is a good choice for you. Credit counselling is actually a phone call with a licensed credit counsellor that takes anywhere from 20 minutes to an hour. 

This is a free resource which not for profit financial educational organizations offer you and other consumers. 

In the call, the counsellor will go through your consumer debt, credit reports, and budget with you. Their goal is to help you better your financial situation by offering you advice and feedback on improving your own unique situation. This could include providing you with resources and tools to assist you in regaining control over your finances. 

They can do this through offering more specialized counselling such as credit and debt counselling, mortgage counselling, student loan counselling, and other types of help. 

One thing that credit counselling does not automatically include is a debt management plan. Debt management assists you in becoming free from debt quicker through reducing your interest rates and coming up with a repayment schedule. 

A DMP would negatively impact your credit reports and score significantly. 

This is why such a solution should only be offered as a matter of last resort. You should be wary of any credit counsellors who suggest that a debt management plan is your best and only choice. 

Should I Consolidate My Credit Card Debt?

If you have a number of balances on credit cards, then you might be considering consolidating your credit card debt. Consolidating debt gathers your higher interest rate debts (such as credit cards) and rolls them over into one lower interest rate payment. 

By reducing the total interest you pay, it reduces your total debt and helps you to pay it down quicker. 

There are three main ways for you to consolidate your debt. The first is to take a low interest (or zero percent interest) credit card balance transfer offer. If a credit card offers you this arrangement, it will allow you to receive this lower interest rate until the end of the promotional period. 

You should make it a goal to pay down the balance within that time frame. The interest rates typically default to a much higher amount after the promotional period ends. 

The second way is to obtain a fixed interest rate debt consolidation loan. You use the loan money to pay off the credit card debt. The instalment loan allows you to pay this back in monthly payments over a pre-determined term. 

Finally, you could also take a home equity loan and use the money to consolidate your credit card bills. There is a risk involved in this if you do not make the loan payments; you could lose your house to foreclosure. In all cases, your options will be limited by your credit profile and score and debt to income ratio. 

Good to excellent credits scores range from about 700 to 850 and will give you more options to consolidate your credit card debt into a single payment. 

Consolidating your debt is a strategy that you can easily pursue without having to seek a credit repair firm or lawyer’s help.