The Fair Credit Reporting Act or FCRA was enacted in 1970 to protect consumers from unfair, misleading, and erroneous credit reports. It also set a time limit for reporting bad credit on a report. There is a limit to how long something that is negative but still accurate can stay on your report.
If there are inaccurate reports on your account, whether they are outright errors or simply misleading and not completely accurate information, you have the right to dispute this information in order for it to be removed. Credit bureaus have 30 days from receipt of a dispute to verify the accuracy of your information or remove it from the report.
However, accurate and truthful information must remain on your report, but only for as long as the statute of limitations allows. The FCRA explicitly describes the period of time during which negative credit information can continue to be reported.
Contrary to popular belief, the reporting time frame is not from the last activity on the account, so making payments or partial payments does not affect how long negative credit can remain on the report. The time limit begins immediately after the date of the first delinquency, with the exception of unpaid tax bonds and unpaid federal student loans. These two items can remain in the report indefinitely, but everything else will disappear within a specified period of time.
Most items will disappear in 7 years regardless of when or even if they have been paid for. This includes late payments and if there are multiple late payments on a single account, each will be treated individually, with a 7-year drop from the date of the late payment. Chapter 13 bankruptcies and tax liens or student loans that have been paid in full will also be automatically reduced after 7 years.
A cancellation and collection account will fall 7 years plus 180 days after the date of the first delinquency. Most collection accounts have been written off from the original lender, so these accounts are generally treated the same as a write off. Collection accounts often change hands between different agencies, however that type of activity cannot legally change the statute of limitations. Both a cancellation account and a collection account must fall 7 years plus 180 days from the date of the first delinquency.
There are some variables of the 7-year rule. A Chapter 7 bankruptcy will stay on your report for 10 years. A rigorous investigation will only stay on a report for 2 years. And of course, if you don’t pay your tax liens or your federal student loans, they can be declared forever or until you pay them off, at which point the statute of limitations begins.
There are many things you can do to repair and improve your credit, even during the 7-10 years when most negative credit must be reported. And while making improvements, make sure you maintain good credit and eventually all bad credit will be erased from the past.
