Worried that your previous credit problems will haunt you forever? Not so. Time is the magic remedy, and even putting as few as 24 months in between you and your past issues starts your credit score rebounding. Also in your favor are the rules for the length of time information can stay on your report. They tip toward the consumer's benefit, with positive information remaining longer than negative.
Exactly how long each entry, negative or positive, remains on your consumer credit report varies by the type of entry. The Federal Trade Commission, through the Fair Credit Reporting Act (FCRA), regulates the three national credit bureaus (Experian, TransUnion & Equifax) in these matters and provides that most bad records will be removed from your report in 7 years, or 10 years in the case of bankruptcies. Note that payment in full on any delinquent account does not remove the account from your credit file before the specified period expires.
According to the FCRA, the following types of entries carry the indicated term length for appearing on a credit bureau report:
• Accounts that are paid as agreed remain for up to 10 years.
• Accounts that are not paid as agreed remain for 7 years.
Collection or charged-off (closed for non-payment) accounts:
• Accounts remain for 7 years.
The time periods listed above are calculated from the "date of last activity" field, shown in your credit bureau report accompanying the particular credit or collection account.
Courthouse records will stay on your credit file for 7 years from the date filed, except in these instances:
• Bankruptcy-Chapters 7 & 11 remain on the report for 10 years, and Chapter 13, dismissed or open, also remains on the file for 10 years.
• City, county, state & federal unpaid tax liens remain indefinitely.
• Paid tax liens remain for up to 7 years from the date released.
• New York residents: Satisfied judgments remain 5 years from the date filed; paid collections remain 5 years from the date of last activity.
• California residents: All tax liens remain for 7 years from the date filed.
• Civil suits, civil judgments & records of arrest: 7 years from the date of filing.
• "Hard inquiries" are those made when a creditor or lender checks your credit because you have applied for a loan or a credit account. They will stay on your report for up to two years.
• "Soft inquiries" are those made by consumers themselves, or by prospective employers or companies who make offers to you based on pre-selected criteria, such as a credit score level. These inquiries also may stay on your report for up to two years, but they have no effect on your credit score.
Although the bureaus adhere to these rules, errors sometimes slip through the automated systems and cause a derogatory entry to show on your credit bureau report after its expiration date. Although a bankruptcy that is 13 years old isn't likely to cause much damage if payment histories have normalized since the filing, you deserve to get the highest score possible. The higher your credit score, the lower your payments in interest charges, insurance rates, and down payment requirements for major purchases.
Correcting length of time errors
If you find a negative entry that's older than it should be, contact the bureaus directly to make the correction. In most cases it is an easy fix with no lengthy disputing or documentation, because the systems are set up to make the deletions according to date and account type anyway.
For more information on the specific regulations regarding credit bureau reports and the length of time entries can be shown, visit the Federal Trade Commission website online at www.ftc.gov. This website also carries an updated version of the FCRA for your review.
Each credit reporting rule has real impact on every consumer. You will be more likely to come out on top with even a small amount of information on your side, so learn the basics and check your credit bureau report regularly to ensure that the required expiration dates have been met.