How long do negative items stay on my credit report?
Accurate negative information generally can be reported for
seven years, but there are exceptions:
- Bankruptcy information can be reported for 10 years;
- Information reported because of an application for a job
with a salary of more than $20,000 has no time
limitation;
- Information reported because of an application for more
than $50,000 worth of credit or life insurance has no
time limitation;
- Information concerning a lawsuit or a judgment against
you can be reported for seven years or until the statute
of limitations runs out, whichever is longer; and
- Default information concerning U.S. Government insured or
guaranteed student loans can be reported for seven years
after certain guarantor actions.
- Tax liens stay on 7 years from the date PAID.
Some other rules to keep in mind:
The Statute of Limitations has nothing to do with the length of time something can stay on your credit report, they are two TOTALLY separate things. Again, there is absolutely NO relationship.
The length of time a negative mark can stay on your credit report starts from the time you were late or the late payment went into collection, not from the last time you made a payment on the account. Some collection agencies update their reporting status on you to keep the account active with the bureaus to extend the time the account appears on your report. Very crafty and underhanded of them, because most often the account is updated and the period of time the account is active appears to be extended. Challenge this! If you do, bureaus will correctly remove it 7 years from origination. Period. In other words, paying a collection will not keep it on your credit report for a longer period of time if you are diligent.
We also received a letter from R. Stuart Phillips, who is currently filing a class action lawsuit against the Big 3 credit bureaus. Here is a letter he received containing the latest interpretation from the FTC: - This is a staff
interpretation letter.
R. Stuart Phillips, Esq.
www.lawyerphillips.com
Division of Financial Practices
~
Clarke W. Brinckerhoff
Attorney
-
202-326-3224
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
February 15, 2000
Ms. Alaina K. Amason
14155 Shire Oak
San Antonio, TX 78247
Dear Ms. Amason:
This responds to your letter concerning the time limitations imposed by the Fair
Credit Reporting Act ("FCRA") on the reporting of chargeoff accounts by a
consumer reporting agency ("CRA," usually a credit bureau). We list your inquiries
on this topic below in italics, with our replies immediately following each item.
1. What reporting limits does the FCRA provide with respect to chargeoffs, and how
long have they been in effect?
Section 605(a)(4), which has been in effect since the FCRA became effective in
April 1971, has always prohibited CRAs from reporting chargeoffs that are more than
seven years old.(1) Section 623(a)(5), which became law in September 1997,
requires a creditor that reports a chargeoff to a CRA to notify the agency (within
90 days of reporting the account) of "the month and year of the commencement of
the delinquency that immediately preceded" the chargeoff. Section 605(c)(1)
provides that the seven year period begins 180 days from that date. Both
provisions were part of the major revision to the FCRA that were enacted in
1996.(2)
2. Is the reporting period extended if (A) the original creditor sells or transfers the
account to another creditor, (B) the consumer responds to post-chargeoff
collection efforts by making a payment on the debt, or (C) the consumer disputes
the account with a CRA? Does it matter whether the 7-year period has expired
when any of these events occurs?
No. In enacting the new provisions discussed above, Congress intended to establish
a date certain -- 180 days after the start of the delinquency that led to the
chargeoff -- to begin the obsolescence period. It did so to correct the often
lengthy extension of the period that resulted from later events under the original
FCRA. Enclosed are two staff opinion letters (Kosmerl, 06/04/99; Johnson,
08/31/98) that discuss the impact of these provisions, and the legislative history
relating to their enactment, in more detail. Because the commencement of the
seven year period is now described with some precision by the statute, it is our
opinion that none of the subsequent events you listed -- sale of the charged off
account by the creditor, or a payment on or dispute about the account by the
consumer -- changes the allowable period for a CRA to report a chargeoff.
3. Since Sections 623(a)(5) and 605(c)(1) provide new rules for calculating the
7-year period that became effective in 1997, do chargeoff accounts now have
different obsolescence periods depending on when the chargeoff occurred?
Yes. Section 605(c)(2) states that the section "shall apply only to items of
information added to the (CRA) file of a consumer on or after" 455 days after
enactment, or December 29, 1997. Therefore, a chargeoff reported to a CRA on or
after that date is subject to the new commencement-of-the-delinquency method
of calculating the obsolescence period set forth in Sections 623(a)(5) and
605(c)(1). On the other hand, a chargeoff reported to a CRA before December 29,
1997, is not covered by the new provisions, as discussed in one of the enclosed
letters (Kosmerl, 06/04/99). If a credit account was reported as a chargeoff before
that date, the Commission's view has been that it can be reported for seven years
from the date the creditor actually charged it off.(3)
The opinions set forth in this informal staff letter are not binding on the
Commission.
Sincerely yours,
Clarke W. Brinckerhoff
1. Section 605(b) provides that there is no time limit applicable to a report made in
connection with credit involving a principal amount (or insurance with a face
amount) of $150,000 or more, or employment for a salary of $75,000 or more. Prior
to September 1997, those amounts were $50,000 and $20,000, respectively.
2. The Consumer Credit Reporting Reform Act of 1996 (Title II, Subchapter D, of
Public Law 104-280, signed into law on September 30, 1996), made many other
changes to the FCRA.
3. Commentary on the Fair Credit Reporting Act, 16 CFR Part 600 Appendix,
comment 605(a)(4)-2. 55 Fed. Reg. 18804, 18818 (May 4, 1990
|
Here is the entire legal text of the Fair Credit Reporting Act pertaining to the credit reporting time period (if you quote it is "Section 605 of the FCRA"):
§ 605. Requirements relating to information contained in
consumer reports [15 U.S.C. § 1681c]
(a) Information excluded from consumer reports. Except as authorized under subsection
(b) of this section, no consumer reporting agency may make any consumer report containing
any of the following items of information:
- (1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the
date of entry of the order for relief or the date of adjudication, as the case may be,
antedate the report by more than 10 years.
-
- (2) Civil suits, civil judgments, and records of arrest that from date of entry,
antedate the report by more than seven years or until the governing statute of limitations
has expired, whichever is the longer period.
-
- (3) Paid tax liens which, from date of payment, antedate the report by more than seven
years.
-
- (4) Accounts placed for collection or charged to profit and loss which antedate the
report by more than seven years.(1)
-
- (5) Any other adverse item of information, other than records of convictions of crimes
which antedates the report by more than seven years.1
(b) Exempted cases. The provisions of subsection (a) of this section are not applicable
in the case of any consumer credit report to be used in connection with
- (1) a credit transaction involving, or which may reasonably be expected to involve, a
principal amount of $150,000 or more;
-
- (2) the underwriting of life insurance involving, or which may reasonably be expected to
involve, a face amount of $150,000 or more; or
-
- (3) the employment of any individual at an annual salary which equals, or which may
reasonably be expected to equal $75,000, or more.
(c) Running of reporting period.
- (1) In general. The 7-year period referred to in paragraphs (4) and (6) of subsection
(a) shall begin, with respect to any delinquent account that is placed for collection
(internally or by referral to a third party, whichever is earlier), charged to profit and
loss, or subjected to any similar action, upon the expiration of the 180-day period
beginning on the date of the commencement of the delinquency which immediately preceded
the collection activity, charge to profit and loss, or similar action.
-
- (2) Effective date. Paragraph (1) shall apply only to items of information added to the
file of a consumer on or after the date that is 455 days after the date of enactment of
the Consumer Credit Reporting Reform Act of 1996.
Do you have a question we haven't answered? Call us! E-mail us! or Buy the Book!
Document last modified Monday, 07-Jun-2004 15:47:43 EDT
|
