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There’s no question that furthering your education can be an expensive endeavor. But depending on what you study, students in some majors can expect to pay a significantly higher price than others.

If your goal is to study law, medicine, or veterinary medicine, for example, and you plan to get a graduate degree, you could end up owing five or six times more than the average person with a bachelor’s degree.

Whether you choose your major out of passion or for the potential paycheck — or both — only time will tell if you’ll get the outcome you’re hoping for. In the meantime, it can be a good idea to look at how much you might have to borrow to finance the course of study you’re considering.

Student Loan Debt in America

How much do student loan borrowers in the United States owe after college?

According to the Federal Reserve’s most recent numbers, outstanding U.S. student loan debt reached $1.74 trillion in the second quarter of 2024. That’s nearly triple what the Fed says Americans owed in 2006.

Gen Xers have the most student loan debt out of any other generation, with an average balance of $44,290 per borrower. Baby boomers have the second-largest amount at $42,520 per borrower, and millennials average $32,800 per borrower.

And the United States isn’t the only country with a high amount of student debt. In England, the value of outstanding loans reached £236 billion (approximately $261 billion in U.S. dollars) at the end of March 2024. The government there forecasts the value of outstanding loans will be around £500 billion (approximately $553 billion in U.S. dollars) by late 2040s.

While student loan forgiveness and other reforms are often discussed here and abroad, little is happening so far.

Recommended: Average Student Loan Debt: By Career

Average Student Loan Debt

According to the Education Data Initiative, the average federal student loan debt balance is $37,853 per borrower. And if you include private loan debt, the average balance may be as high as $40,681.

Of course, the amount you might borrow (or have borrowed) could vary significantly depending on your major and the degree required to pursue your chosen profession.

The average student loan debt for a borrower with a bachelor’s degree, for example, is about $30,500. But if your major moves you on to a graduate degree, the cost can move on, as well — to an average of $65,667 for the graduate degree only ($84,203 on average in total student loan debt). And if you’re thinking about a degree in law or medicine, your debt could be in the hundreds of thousands.

Federal student loan programs also allow graduate students to borrow more money than undergraduates. Though there’s a $31,000 cap on federal loans for undergraduate students who are dependents, graduate students may be eligible to borrow up to the full cost of attendance through the federal Grad Plus program.

Other factors that affect the amount students end up borrowing can include the cost of living in the state where the school is located, whether the school is public or private, and whether the student is paying in-state or out-of-state tuition.

Recommended: How to Pay for College

Student Loan Debt by Major

When you first start thinking about how to choose your college major, it’s likely you base your top choices on the academic subjects you’ve always been good at or things you’re interested in. Maybe you have a passion for a subject you feel destined to pursue.

If you’re a practical person, you also may have considered what career that degree might potentially lead to, and how much you’d earn if it became your profession.

What you may not have thought about — at least not at first — was how much it might cost you to major in one subject vs. another. Or if you might have to get an advanced degree in your major to actually get the job, or paycheck, of your dreams.

Here’s a look at the average student loan debt for some popular degrees:

Law Degree

$160,000 upon graduating

74% graduate in debt

Medical Degree

$243,483 upon graduating

73% have educational debt

Recommended: What Is the Average Medical School Debt?

Dental School

$296,500 upon graduating

82% take out student loans

Nursing

Associate Degree in Nursing (ADN): $23,302

Bachelor of Science in Nursing (BSN): $28,917

Master of Science in Nursing (MSN): $49,047

Almost 70% take out student loans.

Recommended: A Look at the Average Cost of Nursing School 

Business Administration

$41,000 to $170,000 for MBA students

54% of MBA graduates take out loans

Architecture

$40,000 in debt

(% who borrow not available)

Veterinary Medicine

$179,505 on average

82% graduate with debt

Pharmacy

$167,711

82.2% take out student loans

Education/Teaching

$55,800

45% take out loans

Communication/Journalism

Bachelor’s degree: $31,651

Master’s degree: $27,911

(% with loans not available)

Associate Degree Debt by Major

Below is the average debt of students graduating with an associate degree based on major, per Education Data Initiative:

•   Alternative and Complementary Medicine and Medical Systems: $38,533

•   Computer Systems Analysis: $27,924

•   Behavior Sciences: $21,859

•   Construction Management: $19,423

•   Marketing: $16,628

•   Animal Sciences: $12,705

•   Education, General: $11,035

•   Engineering, General: $10,299

•   Biological and Physical Sciences: $7,591

Bachelor’s Degree Debt by Major

Below is the average debt of students graduating with a bachelor’s degree based on major, per Education Data Initiative:

•   Behavioral Sciences: $42,822

•   Computer Programming: $28,586

•   Education, General: $28,001

•   Music: $26,600

•   Architecture: $26,468

•   Construction Engineering: $26,025

•   Social Work: $24,863

•   Accounting and Related Services: $24,086

•   Economics: $20,700

•   Human Biology: $17,994

•   Science Technologies/Technicians, General: $9,529

Master’s Degree Debt by Major

Below is the average debt of students graduating with a master’s degree based on major, per Education Data Initiative:

•   Advanced/Graduate Dentistry and Oral Sciences: $158,155

•   General Sales: $104,650

•   Real Estate Development: $97,023

•   Landscape Architecture: $80,409

•   International Business: $65,052

•   Public Health: $48,726

•   Engineering Science: $45,887

•   Insurance: $43,408

•   Construction Management: $37,620

•   Engineering, General: $33,235

•   Education, General: $29,434

Doctoral Degree Debt by Major

Below is the average debt of students graduating with a doctoral degree based on major, per Education Data Initiative:

•   Pharmacy, Pharmaceutical Sciences, and Administration: $310,330

•   Psychology, Other: $187,804

•   Public Administration: $146,194

•   Health and Medical Administration Services: $101,589

•   Education, General: $82,131

•   Biology, General: $42,879

Federal vs Private Student Loan Debt

As these student loan debt statistics show, the rising cost of attending college can be a heavy financial burden for many Americans. And because there are limits on how much students can borrow in federal loans each year, many turn to private student loans to help cover their education bills.

The national private student loan balance now exceeds $128 billion, according to EducationData.org, which says 88.93% of that balance is in undergraduate loans and 11.07% is in graduate student loans.

Private student loans are a pretty small piece of the overall outstanding student loan debt in the United States — about 8.84%. But the number of students taking out private loans is growing. Student loan borrowers owe 71% more in private student loan debt than they did a decade ago, the Student Borrower Protection Center reports.

Recommended: Private Student Loans vs Federal Student Loans

The Takeaway

No matter what your major is, there’s a good chance you may have to take on some debt to get the education you need and want.

And the final bill could be substantial: The average federal loan debt balance is $37,843 per borrower, but if you choose a major that requires a graduate degree, it could be two or three times that amount, or more.

Most student borrowers use federal loans to help pay for their education. But a combination of federal and private loans may be necessary to cover all your costs.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How much student loan debt is there in the United States?

According to the Federal Reserve’s most recent numbers, outstanding U.S. student loan debt reached $1.74 trillion in the second quarter of 2024.

What is the average U.S. student loan debt per student?

According to Education Data, the average federal student loan debt balance is $37,843 per borrower. If you include private loan debt, the average balance may be as high as $40,681.

Who owns the most student debt?

The federal government — or, more specifically, the U.S. Department of Education — owns about 92.5% of all student loan debt in America.

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Photo credit: iStock/FabrikaCr

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOISL-Q324-055

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Filing for bankruptcy is a major decision that can provide relief from overwhelming debt, but it also has long-lasting consequences, particularly when it comes to your credit. A bankruptcy will stay on your credit report for seven to 10 years, potentially making it harder to obtain new credit or loans, and sometimes even qualify for jobs or housing. Here’s a closer look at how Chapter 7 and Chapter 13 bankruptcies impact your credit and what you can do to minimize the financial fallout.

How Long Does Bankruptcy Stay on Your Credit Report?

Bankruptcy can stay on your credit reports for seven to 10 years, depending on the type of bankruptcy you file. Chapter 7 and Chapter 13 bankruptcy are the most commonly filed types of bankruptcy for individuals, and each has different rules and credit impacts. Chapter 7, which discharges most debts, remains on your credit reports for a longer period; Chapter 13, which involves a repayment plan, stays on your reports for a shorter duration.

It’s important to note that even though bankruptcy stays on your credit reports for many years, its impact on your credit scores diminishes over time, especially if you take steps to rebuild your credit.

💡 Quick Tip: Your credit score updates every 30-45 days. Free credit monitoring can help you learn about your score’s normal ups and downs — and when a dip is cause for concern.

When Is Bankruptcy Removed From Your Credit Report?

Bankruptcy will automatically fall off your credit reports after a set period of time, which varies by type of bankruptcy. The clock starts from the date you first file for protection from the court, not the date of discharge or when the bankruptcy procedure ends. Here’s how long each type of bankruptcy stays on your credit reports:

Chapter 7 Bankruptcy: 10 Years

With Chapter 7 bankruptcy, also known as “liquidation” bankruptcy, a trustee liquidates your assets (with some exceptions), then distributes the proceeds among your creditors. If those funds aren’t enough to cover all of your dischargeable debts, your obligation to pay any remaining debt is eliminated. Since Chapter 7 completely wipes away most of your debt, the consequences to your credit are relatively severe. As a result, Chapter 7 bankruptcy stays on your credit reports for 10 years from the filing date.

During this period, your bankruptcy will be visible to potential lenders, landlords, and employers who check your credit reports. Although the bankruptcy’s impact on your credit scores lessens as time passes, its presence can still make it harder to secure favorable credit terms or loans for up to a decade.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

Chapter 13 Bankruptcy: Seven Years

Chapter 13 bankruptcy, also known as “reorganization” bankruptcy, allows filers to repay their debts over a period of three to five years through a court-approved repayment plan. Unlike Chapter 7, Chapter 13 allows you to keep your assets and work with creditors to pay off some or all of what you owe. At the end of the repayment period, any remaining eligible debts are discharged.

Because Chapter 13 involves a repayment plan and demonstrates an effort to pay back some of what is owed, it remains on your credit reports for a shorter time — seven years from the filing date. After this period, the bankruptcy automatically falls off your credit reports, allowing them to be free of any bankruptcy records.

Can You Remove Bankruptcy From Your Credit Report?

Barring any errors, you generally can’t get a bankruptcy removed from your credit reports. If, however, your credit report says you filed bankruptcy but you did not, or there is any other kind of inaccuracy (such a bankruptcy entry that stays on your credit report past its expiration date), you have the right to dispute the inaccuracy with the credit bureau that compiled the credit report. A dispute doesn’t hurt your credit score and must be addressed by the bureau within 30 days.

Where Does Bankruptcy Appear on Your Credit Report?

Bankruptcy filings typically appear in the “Public Records Information” section of credit reports. While bankruptcy courts don’t directly report information related to bankruptcy cases to the credit bureaus, the three major credit bureaus (Equifax®, Experian® and TransUnion®) collect bankruptcy information from court records, which are open to the public.

As part of your bankruptcy entry, you may see information such as:

•   Type of bankruptcy

•   Status

•   Dates filed and closed

•   Liability amount

•   Exempt amount

•   Amount paid

•   Estimated date of when your bankruptcy should be removed from the credit report

Bankruptcy may also appear on your credit reports under specific accounts. Any accounts that were included in the bankruptcy, such as credit cards or loans, may be noted as “discharged” or “included in bankruptcy.”

What Does Bankruptcy Do to Your Credit Score?

Payment history is the most important factor in your credit scores, so a bankruptcy can take a significant toll, knocking as much as 200 points off your score, according to Experian.

Exactly how bankruptcy will impact your scores, however, will depend on where they stand before you file. For many people, the time leading up to a bankruptcy may include missed payments and accounts in collections — all of which would already cause a major drop in your credit scores. A bankruptcy is more likely to cause significant damage if you didn’t have a lot of negative payment history beforehand.

Either way, the impact of bankruptcy on your credit scores lessens over time. If you take positive steps, such as making timely payments on new accounts and keeping your credit utilization low, you can start building your credit even while the bankruptcy is still on your report.

How to Rebuild Your Credit After Bankruptcy

Rebuilding your credit after bankruptcy takes time, but there are things you can do to help speed up the process. Here are some proven tactics to try.

•   Check your credit report regularly: You can get free copies of your credit reports from each of the three major credit bureaus at AnnualCreditReport.com. When scanning your reports, check to see that the bankruptcy and related accounts are reported accurately. Be sure to dispute any errors that may be dragging down your score unnecessarily.

•  Make all payments on time: Payment history is typically the most important factor in your credit scores, accounting for 35% of the FICO score. To build a positive payment history, you’ll want to pay all of your bills on time and in full. Using a spending app can help keep you on track by ensuring you have sufficient cash available to cover your bills as they come due.

•  Keep credit utilization low: If you have access to credit, aim to use no more than 30% of your available credit limit at any time. This shows that you’re managing credit responsibly.

•  Get a secured credit card: A secured credit card requires a deposit that acts as your credit limit. Using this card regularly and paying off the balance in full each month establishes a positive payment history that can help rebuild your credit.

•  Consider a credit-builder loan: Consider a credit-builder loan: With a credit-builder loan, the lender deposits the loan amount into a savings account, which you cannot access until you finish repaying the loan. Your payments to the lender are reported to the credit bureaus, generating a positive payment history on your credit reports. When you finish paying off the loan, you gain access to the cash.

Recommended: How to Check Your Credit Score Without Paying

The Takeaway

Whether you’re figuring out if bankruptcy is the right choice for you or have already started the process, know that it’s not a permanent part of your credit profile. It will take seven to 10 years to drop from your reports, but bankruptcy’s negative impact can diminish before then, especially if you manage your money responsibly and proactively work to rebuild your credit.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Can Chapter 7 be removed from credit before 10 years?

Chapter 7 bankruptcy generally stays on your credit report for 10 years from the filing date, and it’s difficult to remove it before that time. However, if there’s an error on your credit report or if the bankruptcy is not verifiable with the court, you can dispute it with the credit bureaus. If the dispute is successful, it may be removed early.

How long does Chapter 7 stay on your credit?

Chapter 7 bankruptcy remains on your credit reports for 10 years from the filing date. During this time, the bankruptcy will be visible to lenders, landlords, and others who check your credit report. Although the bankruptcy remains on the report for a decade, its impact on your credit score lessens over time, especially if you take steps to proactively rebuild your credit.

Can you have a 700 credit score after Chapter 7?

Yes, it is possible to achieve a 700 credit score after Chapter 7 bankruptcy, though it may take time. Rebuilding credit after bankruptcy requires careful financial management, including paying your bills on time and keeping your credit utilization low. Taking out a secured credit card or credit-builder loan, and managing repayment responsibly, can also help you rebuild your credit after Chapter 7 bankruptcy.

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Photo Credit/ iStock Photo:Viorel Kurnosov
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Your credit reports contain a record of your borrowing and repayment history, including both positive and negative information. Negative entries (the kind that can hurt your scores) generally stay on your credit reports for seven years. By contrast, positive information (which can help build your credit) typically remains on your credit reports for at least 10 years, and can remain indefinitely.

Here’s a basic primer on what information goes on your credit reports, including how these entries affect your credit and how long they stay there.

What Is a Credit Score?

A credit score is a number designed to predict how likely a person is to repay a loan, based on their credit history. Credit scores generally range from 300 to 850, with higher scores indicating better credit health. Lenders and other creditors use your credit score to determine whether or not to approve your application for financing. Credit scores are also used to determine the interest rate and credit limit you receive.

You actually don’t have just one credit score, but several. The reason is that credit scores can be calculated using different credit reports (we each have three, one from each of the major consumer credit bureaus) and different scoring models. The two most commonly used scoring models are FICO® and VantageScore®.

Here’s a look at some of the main factors that affect your credit scores:

•  Payment history: How consistently you pay your bills on time.

•  Amounts owed: The total amount of debt you currently owe

•  Credit utilization: How much of your available credit you’re using

•  Length of credit history: How long you’ve had credit accounts open.

•  New credit: How often you apply for new credit.

•  Credit mix: The variety of credit types you have, such as credit cards, mortgages, and car loans.

•   Negative events: Whether you have had a debt sent to collections, a foreclosure, or a bankruptcy, and how long ago.

💡 Quick Tip: Your credit score updates every 30-45 days. Free credit monitoring can help you learn about your score’s normal ups and downs — and when a dip is cause for concern.

What Is a Credit Report?

A credit report is a detailed record of your credit history compiled by one the three major credit bureaus — Equifax®, Experian® and TransUnion®. The bureaus collect and store financial information about you that is submitted to them by creditors (such as lenders and credit card companies). Creditors are not required to report to every credit bureau. As a result, your three credit reports may contain slightly different information. Your credit report updates when creditors send new information to the credit bureaus, which generally happens every month or so.

When you apply for credit, lenders will typically check one or more of your credit reports to determine your ability to repay loans. Negative information on your reports can signal higher risk and make it hard to secure credit or result in higher interest rates.
You can access free copies of your credit reports by visiting AnnualCreditReport.com.

How Long Does Positive Information Remain on Your Credit Report?

Positive information — such as timely payments and accounts in good standing — can remain on your credit report for up to 10 years. For example, an account that’s paid off in good standing (meaning there are no late or missed payments) will stay on your report for 10 years after the last payment was reported. This positive information can help maintain, or even build your credit, as it reflects your ability to handle credit responsibly.

Active accounts that are in good standing will continue to show up on your credit report indefinitely. Keeping these accounts open and in good standing can contribute positively to your credit history for as long as they are active.

How Long Does It Take for Information to Come off Your Credit Report?

Negative information doesn’t stay on your credit reports forever, but how long it remains depends on the type of negative entry:

•   Late payments: Payments made 30 or more days late can remain on your credit reports for seven years from the date of the missed payment. Even if you bring the account current, the late payment entry remains.

•   Collection accounts: When an unpaid debt is sent to a collection agency, a separate collections account will appear on your credit reports and stay there for seven years from the date of the original delinquency.

•   Bankruptcies: Chapter 7 bankruptcies stay on your credit report for 10 years from the filing date, while Chapter 13 bankruptcies remain for seven years.

•  Foreclosures: A foreclosure on your home can remain on your report for seven years.

💡 Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.

Will a Lender Getting a Copy of My Credit Report Affect My Score?

Whether a lender checking your credit report can affect your credit score will depend on the type of credit check they do.

Hard inquiry:This occurs when a lender or creditor checks your credit report as part of a credit application process, and stays on your credit report for about 24 months. One hard inquiry won’t have much, if any, impact on your credit scores. Multiple hard inquiries within a short time frame, on the other hand, can have a more significant effect. Fortunately, if you’re rate-shopping for the same type of credit (e.g., a mortgage or auto loan), multiple inquiries within a short period are usually grouped together as a single inquiry for credit-scoring purposes.
Soft inquiry:A soft credit check is what happens when you check your own credit or when a lender preapproves you for an offer without a formal application. Also when an employer, insurer, or utility checks your credit, it’s typically a soft credit check. While soft inquiries remain on your credit reports for two years, they don’t impact your credit score.

Recommended: How Long Does It Take to Build Credit From Nothing?

How to Remove Negative Information From Your Credit Report

While most negative information must remain on your credit reports for a set time period, there are certain steps you can take to remove negative entries:

•  Dispute errors:If there’s inaccurate or outdated negative information on any of your credit reports, you can file a dispute with the appropriate credit bureau online or by mail. The credit bureaus have 30 days to investigate your claim, and if the information is incorrect, it will be removed. Filing a dispute won’t hurt your credit, and could potentially have a positive impact if you’re able to get negative information off your credit reports.

•  Request a goodwill adjustment:If you have a history of on-time payments but made one late payment, you might consider requesting what’s known as a “goodwill deletion.” This involves sending a letter to your creditor, explaining why you were late with a payment, and asking them to remove the negative entry from your report as a gesture of goodwill. Success depends on the creditor, but it can be worth asking if it’s a long-standing account and you’ve generally been a responsible borrower.

•  Wait for negative information to drop off: If the negative information is accurate, your only option may be to wait for it to age off your report. Most negative entries remain for seven years, with some exceptions like Chapter 7 bankruptcy. Over time, however, the impact of negative information diminishes, and practicing good credit habits, such as lowering your credit utilization, can help mitigate its effects.

The Takeaway

Your credit reports contain a detailed history of both positive and negative financial actions, and how long that information stays on your reports varies depending on the nature of the account or event. Positive information, such as timely payments and accounts in good standing, can remain on your reports for 10 years-plus; negative information, such as late payments and bankruptcies, typically stays for seven to 10 years.
While negative entries can take a toll on your credit scores, they don’t remain on your credit reports forever. And even while they are there, their influence lessens over time. To minimize the impact of negative information, it’s important to monitor your credit reports, dispute any inaccuracies, and maintain good financial habits moving forward.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Is it true that after seven years your credit is clear?

It depends on the type of negative entries that are in your credit reports. Late payments, collections, Chapter 13 bankruptcies, and foreclosures typically fall off after seven years. Chapter 7 bankruptcy stays on your credit reports for 10 years.

Can you get negative marks removed from your credit report?

It’s possible to remove negative marks from your credit report, but only if they are inaccurate, outdated, or unverifiable. If you notice any inaccurate information on your credit reports, you can file a dispute with the credit bureaus, either online or by mail. They are required to investigate within 30 days. If they find the information is inaccurate, they will remove it.
Legitimate negative information, however, will generally remain on your credit report until its expiration date.

How long before a debt is uncollectible?

The time after which a debt becomes uncollectible, known as the statute of limitations, varies by state but is generally three to six years. Once the statute of limitations on a debt has expired, creditors can no longer sue you to collect payment, though they can still attempt to collect it. Keep in mind that the debt can remain on your credit reports for up to seven years (and impact your credit scores), even after it becomes legally uncollectible.

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Photo Credit: iStock/miniseries
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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The length of time debt relief stays on your credit report depends on the type you use. Most negative items, including debt settlement, stay on your report for up to seven years. But the start time can vary depending on your situation.

What Is Debt Relief?

Debt relief is typically used as another term for settling your debt. That means negotiating with your creditors to lower your outstanding balances and pay them off for a lower amount. This debt payoff strategy is typically reserved for people with large amounts of debt who are struggling with payments and can’t foresee the ability to pay off their balances in the future.

While getting some of your debt wiped out seems like a great plan, there’s a large degree of risk involved, and you’ll also do damage to your credit score.

How Debt Relief Works

There are private companies that offer debt settlement services, but they charge expensive fees and recommend risky strategies while negotiating. Here’s how the process typically works:

•   A debt settlement company may tell you to pause payments on your credit cards. This causes late fees, penalties, and interest to accrue, not to mention major damage to your credit report.

•   In the meantime, you deposit the money you would have paid into a savings account. You may not use your credit cards during this time.

•   The debt settlement company eventually reaches out to your creditors and offers to pay them a settled amount using the funds you saved.

There is no guarantee that your creditors will agree to the settlement. You also have to pay the debt relief company a fee, usually either based on how much you saved or how much you settled. And if you do have any debts discharged, that amount is typically considered taxable income.

Types of Debt Relief Options

There are a few different debt relief options other than debt settlement:

•  Credit counseling: Work with a nonprofit counselor to review your finances and help create a payoff plan for your debt.

•  Debt management plan:” This may be a recommendation from your credit counselor. You pay into a savings account to the counseling organization, who then makes payments to your creditors on your behalf.

•  Bankruptcy: A personal bankruptcy discharges some of your debt, but it requires either a payment plan to creditors for up to five years or selling off your assets to pay your creditors.

How Each Debt Relief Option Affects Your Credit Report

There are multiple categories that affect your credit score, and each debt relief option is likely to cause damage in some way. Here’s what you can expect.

•  Debt settlement: This option can cause major damage to your credit report because payment history is the biggest contributing factor to your score. If you stop making payments, you will continue to accrue separate late payment entries. The debt will also be listed as “settled” on your credit report.

•  Debt management plan: A credit report may indicate any accounts you’ve enrolled in a debt management plan. While that doesn’t directly hurt your credit score, it can be seen by future creditors and may influence their decisions. And if your counselor requires you to close accounts so you don’t charge more, your available credit could drop, hurting your credit card utilization ratio.

•  Bankruptcy: A bankruptcy can cause your credit score to drop by as much as 200 points.

Check your credit score updates frequently as you navigate any type of debt relief.

What’s the Best Debt Relief for Me?

The Federal Trade Commission recommends starting off with strategies you can implement yourself. Making a budget, for instance, can help you track your spending and perhaps make different decisions about where your money goes. Try using a spending app to see what kind of progress you can make.

You can also talk directly to your creditor to create a new payment plan that works for your financial situation, especially if you’re having trouble paying your mortgage.

Debt Settlement vs. Staying Current

There are pros and cons to both options. You’re not guaranteed success with debt settlement, and your credit score could tank if you stop making payments on your accounts. Plus, any amount that is settled is considered taxable income. If you settle a large amount of your debts, that could bump you into a much higher tax bracket.

Staying current with your balances can preserve your credit. But if you’re just making minimum payments, you could see your balance grow as interest continues to accumulate. It’s best to talk to a credit counselor or other financial professional to help you weigh the pros and cons based on your personal situation.

How Long Does Debt Settlement Stay on Your Credit Report?

A debt settlement stays on your credit report for seven years. But your score should start to rebound before then, especially if you take proactive steps to build your credit.

The start date of the seven-year period depends on whether or not you have late payments associated with the account. If there were no late payments when you settled the debt, that settlement date starts the clock on seven years.

But if the account is delinquent or has late payments, the settlement stays on your report from the first late payment in delinquency.

How Debt Settlement Affects Your Credit Score



Debt settlement can hurt your credit score, but it may not cause as much damage as having the account go to collections. However, your accounts will be listed as settled, which is visible to lenders in the future. Although it takes time to improve your credit score after a debt settlement, it can increase before the settlement is removed.

How to Remove Settled Accounts from Your Credit Report

The only way to remove a settled account before the seven-year period is to file a dispute with one of the credit bureaus. This process doesn’t hurt your score, but is only successful if the account has incorrect information listed on your credit report.

How Long Does It Take to Improve Your Credit Score After Debt Settlement?

It depends on many factors, including how you handle your other finances in the months and years following a debt settlement. Proactively taking steps to rebuild your credit can help expedite the process.

How to Improve Your Credit After Settling Debt

Here are some strategies to help increase your credit score after debt settlement.

•   Check your credit report regularly for accuracy. You can get a copy of your report for free once a week from each of the three major credit bureaus. Visit AnnualCreditReport.com to get started.

•   Pay your bills on time.

•   Get a credit card.

•   Pay down any remaining high-interest debt.

Credit Score Tips

Knowledge is power when it comes to managing your credit. Check your credit score without paying to know where you’re starting from immediately after your debt settlement is finalized. Then use a credit score monitoring app to get personalized advice on what tactics to take.

The Takeaway

Any type of debt relief will have some impact on your credit score and financial future. Weigh the benefits and drawbacks of each option to choose the right next step. No matter what you decide to do, regularly checking your credit reports is a smart way to better understand your overall financial health.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Does debt relief ruin credit?

It depends on the type of debt relief you choose. Debt settlement will be listed on your credit report for seven years, but your score could start to rebound before then.

How long does it take to rebuild credit after debt relief program?

There’s no exact timeline for rebuilding credit after a debt relief program. Expect it to take up to two years to start seeing a noticeable difference. Using a credit monitoring service can help you track exactly how much progress you’re making.

Can debt settlement be removed from a credit report?

Debt settlement can be taken off a credit report only if the information is inaccurate. Otherwise, it will take seven years before the settled debt drops off your credit report.

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Photo Credit: iStock/Jelena Danilovic
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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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