What causes a negative credit history?
A negative credit history is “a record of unfavorable financial behaviors and events related to borrowing and repaying money,” said Markia Brown, a certified financial education instructor and registered financial associate.
It can “lead to higher interest rates on loans and credit cards, difficulty getting approved for new credit, challenges in renting an apartment or getting a job, and even higher insurance premiums,” she said.
There are several factors that can contribute to a negative credit history:
Late or missed payments
Payment history accounts for 35% of your FICO score — making it the largest factor in determining your score. If you regularly pay your credit card bill or mortgage late or, worse, if you miss a payment, this will negatively impact your credit score.
Late payments can stay on your credit score for up to seven years.
High credit utilization ratio
Your credit utilization ratio is a measure of how much of your available credit you’re actively using. It is part of what FICO refers to as “amounts owed,” which makes up 30% of your score. Repeatedly maxing out your credit is a red flag to lenders that you might be overextending yourself.
Try to keep your credit utilization ratio below 30%. For example, if you have $3,000 in available credit, keep your balance below $900.
Multiple hard inquiries
When you apply to open a new credit account, creditors will perform a hard inquiry to review your credit report. The occasional hard inquiry will only have a temporary negative impact, but multiple hard inquiries in a short period can indicate a high risk to creditors.
Hard inquiries can stay on your credit report for up to two years.
Closing multiple credit accounts
Closing multiple accounts can negatively affect your credit score in two ways:
- If you close an account that you’ve had for a long time, this reduces the length of your credit history, which accounts for 15% of your FICO score. In general, having a longer credit history is a positive indicator to lenders.
- Closing multiple accounts can reduce your credit mix, which accounts for 10% of your score. Lenders like to see a healthy mix, such as credit cards, an installment loan and a mortgage.
Defaulting on a loan
Default means you’ve failed to make several payments on your loan or you haven’t paid for a certain period of time. Defaulting on a loan can significantly damage your credit score and will stay on your credit report for up to seven years.
Foreclosure
If you fail to make payments on your mortgage, the lender can take back the property. A foreclosure will typically remain on your credit score for up to seven years from the date of foreclosure.
Bankruptcy
If you are completely unable to pay back your debts, you may have to file for bankruptcy. Typically, bankruptcy will give you the lowest possible credit rating. A bankruptcy can also remain on your credit report for up to 10 years, making it difficult to borrow money again.
How to check if you have a negative credit history
Your credit score is a three-digit number that usually ranges from 300 to 850. The two best-known credit scoring companies are FICO and VantageScore. Both use a combination of factors to determine your score, including:
- Payment history
- Amounts owed
- Length of credit history
- New credit
- Credit mix
Each uses a slightly different algorithm to calculate your credit score. As a result, you might notice that your scores are similar but not exactly the same.
With the FICO model, a negative or poor credit score is typically anything under 580. With VantageScore, a subprime score is below 600.
» MORE: How to build credit
There are also three major credit bureaus: Experian, Equifax and TransUnion. These bureaus are responsible for compiling and reporting your credit data.
You are legally entitled to a free copy of your credit report from each of them yearly. You can request your free reports by visiting AnnualCreditReport.com. Alternatively, you can call 877-322-8228 or download and complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
If you request your credit report by phone or mail, Annual Credit Report will mail your report within 15 days.
How to improve negative credit
If you have a negative credit history, it is possible to repair the damage by clearing any outstanding debts and maintaining responsible financial habits. Some ways to improve your credit score include the following:
- Monitor your credit report. Check your credit reports for any errors. If you suspect an error, dispute it by contacting the credit bureau as well as the company that provided the negative information. Explain in writing what you think is wrong, with documentation to back up your claim.
- Work with a credit repair company. You can hire a credit repair expert to dispute any credit report errors, which may be quicker and more convenient than doing it yourself.
- Make payments on time. To avoid late or missed payments, consider automating your bills. You can also set calendar reminders or alerts to remind you when it's time to pay.
- Keep your credit utilization low. Aim to keep your credit utilization ratio below 30% at all times. To keep your balance low, you can try making multiple payments throughout the month instead of waiting until the end of the month.
- Don’t apply for credit unless you need it. Every time you apply for new credit, the creditor will run a hard inquiry. Each inquiry will drop your score.
- Consult a credit counselor. A nonprofit credit counselor can review your credit report, identify problems in your finances and set you up with a budget to get back on track.
» MORE: How to fix your credit
Best practices for maintaining good credit
Once you’ve done some damage control and are past the initial repairing stage, there are a few ways to maintain a good credit score. These practices will help you avoid falling back into the danger zone and build healthy habits when it comes to managing your credit.
- Establish a check-in routine. Spend a few minutes every month to check your spending habits, credit card statements and autopays to ensure everything is active and looks correct.
- Maintain consistent patterns. Set up a routine payment (like your phone bill, internet or streaming service) for each credit card and turn on autopay. Having a monthly payment on each credit card will prevent your account closing due to inactivity.
- Have an emergency fund. Paying in cash won’t boost your credit, but having some cash set aside for emergencies can help you avoid raising your credit utilization or maxing out your credit.
- Continue checking your credit reports. Even after your credit score has improved, you should still request your annual credit report and check for inaccurate information.
FAQ
How long does negative information stay on your credit report?
Most negative information will stay on your credit report for up to seven years. A bankruptcy can stay on your credit report for up to 10 years.
Is bad credit better than no credit?
Bad credit indicates you have made mistakes in the past, whereas no credit means you have no credit record at all. Both can make it difficult to borrow money; however, no credit can often be fixed much faster than bad credit. You can build a credit score from nothing in about six months, while fixing bad credit can take a number of years.
Can you wipe your credit history clean?
While you can’t wipe your credit history completely, you can dispute any errors that you find in your report. It will take up to seven years for most negative information to fall off your credit report.
What is a negative balance on a credit card?
A negative balance on a credit card means your bank owes you money. This may happen if you pay more than you owe on your balance.
Bottom line
If you have a negative credit history, don't beat yourself up. Everyone makes mistakes or has a period of financial struggle. Focus on creating a plan to move forward and improve your credit.
Start by ordering your credit reports and carefully review them for errors. Do this at least once a year. Next, focus on paying your bills on time, every time. Keep your credit utilization ratio under 30%, and avoid applying for new credit unless you absolutely need it.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- FICO, "What's in my FICO Scores?" Accessed Feb. 1, 2026.
- Equifax, "How Long Does Information Stay on My Equifax Credit Report?" Accessed Feb. 1, 2026.
- FICO, "What is a Credit Score?" Accessed Feb. 1, 2026.
- Consumer Financial Protection Bureau, "How do I dispute an error or my credit report?" Accessed Feb. 1, 2026.
- VantageScore Solutions, "The Complete Guide to Your VantageScore 4.0 Credit Score." Accessed Feb. 1, 2026.
