It is not true that after 7 years your credit is clear.
Your credit score does not reset from 0 after 7 years or clear.
Instead after 7 years, the individual negative marks on your credit like accounts in collections, late payments etc are legally aged off your credit report after 7 years.
This means that your score may naturally improve after 7 years, but the actual debt does not go away and the credit score does not clear.
Closed accounts that are in good standing can stay on your report for 10 years, which helps your average age of accounts.
Chapter 7 bankruptcies can stay on your report for up to 10 years, and Chapter 13 bankruptcies often fall off your credit report after 7 years.
Hard pulls and hard inquiries, which is when a lender checks your credit remain on your credit report for 2 years.
And missed payments, charge offs and accounts that are sent to collections fall off your credit report exactly 7 years from the date of the first missed payment.
And while you cannot restart your credit score, you can improve your credit score over time by disputing errors, paying on time, having lower credit utilization and even opening a secured credit card.
If you need to establish new credit lines, you can open secured credit cards that require a cash deposit that acts as your credit limit and makes them easier to get approved for and as you use the secured credit card and pay it off on time, it can help improve your credit score or build a new credit score, which can help you get approved for a regular credit card in the future.
You should also lower your credit utilization by keeping your credit card balances well below 30 % of your total limit, and ideally pay them off in full every month.
And pay on time for your loans, mortgages and credit cards as payment history accounts for 35 percent of your FICO score.
Setting up auto pay or calendar reminders to ensure you never miss a payment due date is also a good idea.
And always try to pay other bills on time and prevent them from going to collections as unpaid bills like electric, gas, internet, phone bills etc when sent to collections will lower your credit score.
Paying these bills on time does not increase your credit score, but they can hurt your credit score if sent to collections.
And dispute any errors, as you can get your free credit reports from AnnualCreditReport.com and dispute any inaccurate or fraudulent information, which can be hurting your credit.
A good credit score is between 670 and 739 on the FICO scoring scale that runs between 300 to 850.
Credit scores above 740 are considered to be very good to exceptional credit scores and will unlock the best interest rates on loans and cards.
Credit scores are grouped into standard tiers which include.
Exceptional credit score is between 800 to 850.
Very Good credit score is between 740 to 799.
A Good credit score is between 670 to 739.
A Fair credit score is between 580 to 669.
And a Poor credit score is between 300 to 579.
When it comes to credit scores, your credit score is also a snapshot of your financial responsibility, which is determined mainly by 5 key factors which include.
Your payment history, which is your track record of paying your bills on time.
Amounts Owed and Credit Utilization, which is how much of your available credit you're currently using.
Your length of credit history, which is the age of your oldest and average accounts.
New Credit, which is how many credit inquiries and new accounts that you have.
And your credit mix, which is the variety of credit that you hold, like auto loans, mortgages, credit cards etc.
Having a credit score in the "Good" range or higher proves that you are a reliable borrower to lenders, which generally results in easier approvals for apartment rentals, mortgages, credit cards and credit card perks and lower interest rates.
Landlords frequently pull your credit during the rental application process and having a good credit score, helps increase your chances of getting approved for the apartment rental.
With a good credit score, you also can often access credit cards with better rewards, cash back and 0% introductory APRs.
And with a good credit score, you can often get lower interest rates, which saves you thousands of dollars over the life of an auto loan or home mortgage.