When paying debts, try to be strategic about which debts to pay first. Know when debt will “fall off your report” and only start to pay on the debt if you truly feel you can completely pay it off before it “falls off.”
The following table lists how long items found on a credit report can negatively impact your credit. Keep in mind, it may continue to show up on your report past that timeline, but will no longer be making a negative impact.
| Type of Information |
Number of Years |
| Most Negative Information |
7 Years |
| Bankruptcy Information |
10 Years |
| Criminal Convictions |
No Time Limit |
| Most Student Loans (Private/Government) |
7 Years |
| Perkins Student Loans |
No Time Limit |
| Paid Tax Liens |
7 Years |
| Unpaid Tax Liens |
No Time Limit |
| Lawsuit or Unpaid Judgment |
7 years or until statute of limitation runs out, whichever is longer |
Debt Reduction Strategies
Debt Snowball
In this strategy you make as large of a payment you can afford to the smallest debt while continuing to make minimum payments on all your other debts. As small debts get paid off, add that amount to the minimum payment of next smallest debt. This means you will eventually have fewer debts to make payments on. This is a good strategy for those that need motivation because it is gratifying paying off smaller debts more frequently.
Debt Avalanche
With debt avalanche you make as a large of a payment as you can afford to the debt with the highest interest rate while continuing to make minimum payments on all of your other debts. As debts get paid off, add that amount to the minimum payment of next largest interest rates. This means you will pay less interest, and usually results in paying off debt a few months quicker. This is a good strategy for people who are highly motivated, and want to avoid paying extra interest.
