Credit Bureaus – Learn the Truth about Credit Reporting
Sep 11th, 2008 by Matt Douglas
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?
Is a one time mistake with your credit really worthy of a seven year punishment? Why should you have to pay the outrageous cost of having a bad credit report, especially when it was just a brief time in your life? Do all the months of paying on time not count for anything?
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.
Congress established the seven year maximum for the credit bureaus. However this is only the maximum, you can often have a mark removed before the seven years have slowly ticked away.
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.
Reporting to the credit bureaus is completely voluntary. Creditors and collection agencies are not required to report any notations or accounts to the bureaus. As well they often remove notations and accounts long before seven years.
Typically the creditors and collection agencies just need some influence to remove a mark. This influence should come from a well crafted dispute letter or a good credit repair attorney. The credit bureaus will also give you some credit repair once the seven year time limit runs out.
In a utopian society there would be no time limits on credit reporting. Instead, marks would remain as long as they truly reflected the applicant. Information found on a credit report would only provide accurate marks about the applicants’ credit worthiness. Instead of being an excuse for a creditor to give you unreasonable interest rate or down payment.
However, the sad truth is that for now we are stuck living with the seven year limit. However, why should we wait to repair questionable credit until some arbitrary limitation has elapsed? Why shouldn’t we delete questionable and misleading information immediately so that we can become creditworthy again?
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