Credit Bureaus – Learn the Truth About Credit Reporting
A frequent concern of individuals is “how long will a negative listing remain on my credit report?” The answer is seven years. With a bankruptcy or judgment it can stay on your report for up to ten years.
Most people feel like this is an undeserved prison sentence they have been given. During this time they can not move into a house or purchase a new car at a reasonable interest rate.
Why seven years?
Should a single slip-up deserve a seven year punishment? Should you have to live with a bad credit report for being out of work for a few months, even when we caught up on our bills soon after?
Is there something magical or statistically relevant about seven years that will make somebody all of a sudden credit worthy again? Did financial experts perform complicated tests and discover that a person needs seven years for credit rehabilitation?
Of course not, there is no good reason whatsoever for the seven year reporting law. It is a completely arbitrary time limit.
The Fair Credit Reporting Act was passed by congress in 1970. This piece of legislation established the reporting time limit. Before the Fair Credit Reporting Act a negative notation stayed on your credit report forever.
Finally, Congress placed a time limit on the bureaus. Please do not be confused that seven years is how long an item must remain on your credit. Seven years is the reporting maximum.
In other words, it is illegal for a credit bureau to report bad credit for more than seven years. Of course, there are many occasions where people rid themselves of negative items long before seven years.
Creditors and collection agencies are not required to report a listing. This is completely voluntary on behalf of the creditors and collection agencies. Furthermore creditors and collection agencies have often removed negative marks before the seven year limit.
Creditors and collection agencies usually just need a little encouragement from a compelling dispute letter or a good credit repair attorney. Plus, the credit bureaus perform credit repair on your report at the seven year mark.
In a perfect credit world negative marks would remain on a credit report forever. So long as they accurately reflected the credit worthiness of the applicant. Instead our credit reports are an excuse for creditors to assign outrageous interest rates and down payments.
The point is since we don’t live in that world, why should we wait to repair our credit? Why shouldn’t we take steps today to erase questionable and misleading information from our credit report? This way we don’t have to pay the high cost of bad credit longer than we have to?