Credit Report Decoder

A hard inquiry happens when a lender pulls your credit to make a lending decision — applying for a credit card, mortgage, auto loan, or apartment. Hard inquiries stay on your report for 2 years and can lower your score by a few points. Multiple hard inquiries for the same type of loan within a short window (usually 14–45 days) are typically counted as one by FICO (rate shopping). A soft inquiry happens when you check your own credit, when an employer does a background check, or when a creditor pre-screens you for an offer. Soft inquiries are NOT visible to lenders and do NOT affect your score.

A charge-off means the original creditor gave up trying to collect and wrote the debt off as a business loss on their books — typically after 180 days of non-payment. It does not erase the debt. You still legally owe it, and the debt may be sold to a collection agency (which creates a separate collection account on your report). A charge-off is one of the most damaging marks possible and stays for 7 years from the date of first delinquency. If you pay or settle a charged-off debt, the account should update to "paid charge-off" or "settled charge-off" but the mark still remains.

The 7-year clock starts from the date of first delinquency — not when it was charged off, not when it was sent to collections. This prevents creditors from restarting the clock by selling the debt. Reporting periods: Late payments, collections, charge-offs, repos, foreclosures — 7 years. Chapter 13 bankruptcy — 7 years from filing date. Chapter 7 bankruptcy — 10 years from filing date. Hard inquiries — 2 years. Positive accounts — can remain indefinitely, which is why you should keep old paid-off accounts open if possible.

Credit utilization is the percentage of your available revolving credit (credit cards, lines of credit) you're currently using. If your total credit limit is $10,000 and your current balances total $3,000, your utilization is 30%. This single factor accounts for about 30% of your FICO score — second only to payment history. Keeping utilization below 30% is the general guideline; below 10% is optimal for maximum score benefit. Utilization is calculated both per-card and across all cards combined. High utilization signals financial stress to lenders even if you pay the balance in full each month — because utilization is measured on your statement closing date, not your payment date.

Under the Fair Credit Reporting Act (FCRA), you can dispute any information that is inaccurate, incomplete, or unverifiable. Disputable errors include: accounts that are not yours, wrong balances or credit limits, closed accounts listed as open, late payments you didn't make, duplicate accounts for the same debt, accounts past the 7-year reporting period, and wrong personal information. Dispute directly with each bureau (Equifax, Experian, TransUnion) online, by mail, or by phone — it's free. The bureau must complete its investigation within 30 days (45 days if you submit additional documents). If the item cannot be verified, it must be removed. If the creditor verifies it but you disagree, you can add a 100-word statement to your file.

Paying a collection doesn't remove it — it updates the status to "paid collection" and the balance to $0, but the derogatory mark remains for 7 years from the original delinquency date. The exception is if you negotiate a "pay for delete" agreement before paying, where the collection agency agrees to remove the account in exchange for payment. Get this in writing before sending any money. Note: major credit bureaus' policies on "pay for delete" have tightened in recent years — Experian and TransUnion typically don't honor them even if the collector agrees. The most reliable way to remove a collection is to dispute it if it's inaccurate or too old.