How Long Does A Bad Credit Rating Last? Complete Guide

by | Apr 2, 2024

Bad credit refers to a low credit score or a poor credit history, indicating to lenders that an individual may be at a higher risk for borrowing.This condition is typically the result of past financial behaviours like late payments, defaults, bankruptcy, or carrying high debt levels.

Having bad credit can make obtaining loans, credit cards, and favourable interest rates more challenging, affecting an individual’s ability to finance major purchases.


How Long Does A Bad Credit Rating Last?

The duration of bad credit on your report varies: repayment history details last up to 2 years; overdue debts and credit applications remain for 5 to 7 years.

Personal insolvency or bankruptcy records can persist for up to 10  years. Although these blemishes can make credit repair challenging, improving your financial behaviour can gradually enhance your credit rating.


Repayment History

Repayment history on a credit report reflects your track record of paying back debts, including whether payments were made on time or missed. This information typically remains on your report for up to 2 years. It’s an important factor in determining your credit score, giving lenders insight into your reliability as a borrower.


Bankruptcy Records

  • Chapter 7 bankruptcy, often called liquidation bankruptcy, allows individuals to eliminate most unsecured debts, such as credit card debt and medical bills. A bankruptcy trustee may sell certain assets to pay creditors during this process. Chapter 7 bankruptcy remains on your credit report for 10 years from the filing date. Its impact on your credit score decreases over time, especially with responsible financial behaviour post-bankruptcy. 
  • Chapter 13 bankruptcy, also known as a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their debts. Debtors propose a repayment plan to pay creditors over three to five years. Under Chapter 13, the debtor can keep their property and consolidate debts into manageable payments. Chapter 13 bankruptcy stays on a credit report for 7 years from the filing date.

Duration Of Overdue Debts And Credit Applications

Overdue debts and credit applications generally stay on your credit report for five to seven years. It includes any debt of at least $150 overdue for over 60 days. Information about your applications for loans or credit, regardless of approval, also typically remains for seven years.

Hard Inquiries

Hard inquiries occur when a financial institution checks your credit report to make a lending decision, often after you’ve applied for a loan or credit card.

These inquiries can lower your credit score, indicating you are seeking new credit. Hard inquiries remain on your credit report for two years, but their impact on your credit score diminishes over time, usually after a few months.


Foreclosures can significantly impact credit scores when a lender takes possession of a property due to the borrower’s failure to make loan payments.

This negative mark remains on a credit report for seven years, reflecting the serious nature of the default. Over time, its impact on creditworthiness decreases, especially if positive financial behaviours are adopted post-foreclosure.


Credit Rating And Its Factors

A credit rating evaluates the credit risk of potential debtors, including individuals, businesses, or governments, forecasting their ability to repay debt and the likelihood of defaulting.

Credit ratings help determine creditworthiness and influence loan terms.


Payment History (35%): Reflects whether you pay bills on time. Late payments negatively affect your score.

Debt Levels/Credit Utilisation (30%): Credit utilisation is the ratio of your credit card balances to credit limits. It should be below 30%. High utilisation signals potential financial stress, negatively affecting your credit score. 

Credit History Length (15%): Longer credit histories provide more data, potentially improving your score.

Credit Mix (10%): A diversity of credit types, such as credit cards and mortgages, can positively influence your score.

New Credit/Inquiries (10%): Opening several credit accounts can lower your score.


How to Repair A Bad Credit Rating?

Improving a bad credit rating requires time, discipline, and a consistent approach to managing your finances. You can fix your credit rating by considering the following factors:

Check Credit Report: Obtain your credit report from major credit bureaus. Review it for inaccuracies, outdated information, and dispute errors with the credit bureau.

Pay Debts: Focus on paying off outstanding debts, especially those with high interest. Consider negotiating with creditors for lower payments or settlements.

Timely Payments: Ensure all current accounts are kept in good standing by paying bills on time, every time.

Credit Utilisation: Maintain a low credit utilisation ratio. Aim to use less than 30% of your available credit.

Limit New Credit: Avoid unnecessarily taking on new credit lines, as each application can impact your credit score due to hard inquiries.

Secured Credit Cards: If you need help getting traditional credit, consider a secured credit card, which requires a cash deposit that serves as your credit limit.

Credit Builder Loans: These are loans where the amount you borrow is held in a bank account while you make payments. Upon completion, you get access to the funds.

Professional Help: If overwhelmed, consider seeking help from experts of Fix Bad Credit, they can assist you in managing debt and improving your credit.



A bad credit rating reflects financial challenges but isn’t permanent. Its duration on your report ranges from two to ten years, influenced by the nature of the negative marks.

While serious issues like bankruptcy linger longer, their impact fades with time, especially when offset by positive financial behaviours.

Proactive steps towards credit repair and responsible financial management are key to improving and overcoming the effects of a bad credit rating, opening up opportunities for better credit offers in the future.


Contact Us

For detailed guidance on the duration of a bad credit rating and steps for improvement, feel free to reach out for personalised advice. Our experts can provide comprehensive support tailored to your specific financial situation.

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B M Peachey

B M Peachey, has over 15 years of experience investing in property and the stock market, in both New Zealand and Australia. She has a post-graduate degree, with qualifications in Finance and Mortgage Broking and in Accounting and Bookkeeping. She is passionate about ensuring people have access to credible, reliable, and easy to understand information to help them get in control of the life they REALLY want to live.

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    Disclaimer: The information in this article is general in nature as it has been prepared without taking account of your specific objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.