How long after I default on an unsecured loan will a mark be put on my credit record?
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Unfortunate things happen in our lives that can cause us to not be able to pay our bills on time. Many people go through this and they really don't want to. However, this can cause a downward spiral that can result in bad marks on credit records and it can be very difficult to dig out.
Any time that you default on an unsecured loan, you will find that a mark will be placed upon your credit report. However, when this mark appears really depends on your credit provider. The standard is that the mark will be placed when you are approximately 60 days past due. The reason for this amount of time is to give you time to get your affairs in order for you to pay the bill. The lender will also send you a letter telling you that you need to remit payment as soon as possible so that you can avoid a negative mark on your credit report. However, you may have to pay penalties for not making your payment on time. They may have a set late fee that is universal throughout their entire institution or they will impose a late fee that is a certain percentage of your monthly payment amount.
If 60 days pass and you have not sent your payment, a negative mark will be placed on your credit record. If you make the payment, but you do not make the following month's payment as well, the following month will also result in a mark if a payment is not made. That is why it is important to not be late on payment at all. It can create an accumulative effect that is very difficult to catch up with. This could literally have you consistently running 60 days late on your loan payments. This translates into consistent negative marks.
If you fail to make the loan payment at all, you will continue to have negative marks placed on your credit file for every month you don't pay. Although these negative marks remain on your report for 5 years, having a year or so of negative marks could result in you being affected for anywhere between 5 to 7 years. If the creditor tries to reach you and they are unsuccessful, they may decide to "clearout" the account. If they try for a year, you have one year of negative marks and each mark will take 5 years to come off of your record. If after a year a clearout is done by the credit provider, that clearout lasts for another 7 years from the date it was filed.
So you can now see that there are two different types of marks that can occur on your credit report. 60 days is the standard period in which a creditor waits to place a mark on your record. As for when a clearout is placed on your record, this is left up to the credit provider's discretion. They have to exhaust every option available to reach you before they can do this.
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