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Old 03-11-2013, 04:21 PM
 
Location: Brooklyn, NY
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If your credit score was devastated by a single event of default on a major loan years ago (like student loans or a mortgage), how long a period of perfect behavior with no incidents of default does it take to get back into a reasonable range (say, the mid/high 600s)? Any idea?
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Old 03-11-2013, 05:28 PM
 
Location: The Triad (NC)
29,705 posts, read 64,689,413 times
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Quote:
Originally Posted by BrownstoneNY View Post
If your credit score was devastated by a single event...
how long ...does it take to get back into a reasonable range...?
The shot clock doesn't even START until after the default is remedied.
From that point... about two years of being steady should show.
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Old 03-12-2013, 12:09 AM
 
2,099 posts, read 5,951,082 times
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Quote:
Originally Posted by MrRational View Post
The shot clock doesn't even START until after the default is remedied.
From that point... about two years of being steady should show.
This is pretty general. But you are correct, the default would need to be resolved. The default will affect the credit score heavily for 7 years after the last account update (being settled, paid, etc). If the OP had a foreclosure or short sale, that's obviously an issue too.

How long will it take? It all depends on what else is on your credit, how low you keep your credit card utilization, continued payment history, how old the accounts are, etc. there's really no telling...you just have to get everything settles, make sure you ALWAYS pay your debts, and eliminate high debt-to-credit ratios on credit cards.
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Old 03-12-2013, 01:47 AM
 
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Anytime you make a payment on an account, the 7 year clock that a debt can be reported, will restart. So let's say you defaulted on a student loan in 2007, and ignored it completely, in 2014 it would age off your credit report. But, let's say you make a $10 payment in 2010, then the clock restarts, and the account would become obsolete, in 2017.

Whether or not you have open positive accounts also make a big difference in how quickly your scores will rebound.
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Old 03-12-2013, 02:51 AM
 
Location: 23.7 million to 162 million miles North of Venus
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Once an account is charged off then nothing can re-age the reporting period. Any payment(s) made after an account is charged off would not re-age the reporting period (it is illegal to re-age the reporting time period). Though it might reset collecting SOL, that is if your state allows the collecting SOL to be reset.

You were pretty vague about what type of "single event default" you're talking about.
If it was a single late payment ... the late payment would be removed 7 years from the date of the late.
If you had a credit card, mortgage loan or a non federally backed student loan that you just stopped paying on and then it was charged off .... it would be removed 7 years + *180 days from the date of the first missed payment and the account was never brought current leading to the charge off. (any payment after the first missed payment that does not bring the account current, before the account is charged off, would not count as the default date)
If it was a federally backed student loan and you stopped paying on it then it can continue to report until 7 years after it's paid.


*The extra 180 days was added to give original creditors a little flexibility (in case they had shoddy record keeping and couldn't provide an exact date of the first late). Often, though not always, once a charge off had reported for the first 7 years, but still has the extra 180 days to go, then an obsolete dispute may work to get it removed.

A late pay or a default on a mortgage or student loan (especially mortgages) carries more weight with FICO and with lenders then lates or defaults on other types of accounts like credit cards, general loans, etc. Because of that it could take a couple of years longer for it to stop having a large impact on your scores or how lenders view your reports then it would if it were a credit card, etc.
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Old 03-13-2013, 04:47 PM
 
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There are ways to actively "build" credit that work much faster than any 2 years, guys, and a mortgage default doesn't necessarily drive down your credit a lot. Mine only went down to 620., from 720, and the diff between what was owed and what the banks got when they sold the property was 200k.
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Old 03-13-2013, 09:59 PM
 
1,092 posts, read 2,973,309 times
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I disagree about the reaging info posted here.

Quote:
Originally Posted by berdee View Post
Once an account is charged off then nothing can re-age the reporting period. Any payment(s) made after an account is charged off would not re-age the reporting period (it is illegal to re-age the reporting time period). Though it might reset collecting SOL, that is if your state allows the collecting SOL to be reset.

You were pretty vague about what type of "single event default" you're talking about.
If it was a single late payment ... the late payment would be removed 7 years from the date of the late.
If you had a credit card, mortgage loan or a non federally backed student loan that you just stopped paying on and then it was charged off .... it would be removed 7 years + *180 days from the date of the first missed payment and the account was never brought current leading to the charge off. (any payment after the first missed payment that does not bring the account current, before the account is charged off, would not count as the default date)
If it was a federally backed student loan and you stopped paying on it then it can continue to report until 7 years after it's paid.


*The extra 180 days was added to give original creditors a little flexibility (in case they had shoddy record keeping and couldn't provide an exact date of the first late). Often, though not always, once a charge off had reported for the first 7 years, but still has the extra 180 days to go, then an obsolete dispute may work to get it removed.

A late pay or a default on a mortgage or student loan (especially mortgages) carries more weight with FICO and with lenders then lates or defaults on other types of accounts like credit cards, general loans, etc. Because of that it could take a couple of years longer for it to stop having a large impact on your scores or how lenders view your reports then it would if it were a credit card, etc.
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Old 03-14-2013, 01:48 AM
 
Location: 23.7 million to 162 million miles North of Venus
5,557 posts, read 5,272,825 times
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Quote:
Originally Posted by Litlove71 View Post
I disagree about the reaging info posted here.
It is illegal per the FCRA for an original creditor, collector or junk debt buyer to re-age the negative account to report for longer than the original 7.5 years (from the date of first delinquency where the account was not brought current leading to the charge off)

In fact, in the past (2004) NCO settled with the FTC for $1.5 million for exactly that reason, they illegally re-aged accounts to report for longer than the original 7 years. They aren't the only CA's/JDB's that had to pay (either through suits by individuals or by the FTC) for illegal re-aging.
NCO Group to Pay Largest FCRA Civil Penalty to Date

Last edited by berdee; 03-14-2013 at 01:58 AM..
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