How Long Can Bad Stuff Remain on Your Credit Reports?
Have you ever suspected that an item might be hanging around on your credit reports for too long? There is a chance you could be right. The credit reporting agencies have strict instructions, detailed in the Fair Credit Reporting Act (FCRA), which they must follow regarding the inclusion of derogatory information on your credit reports. Here is a guide to help you determine whether something has been hanging out on your credit reports past its expiration date.
3rd Party Collections
Per the FCRA collection accounts must be purged (aka removed or deleted) from your credit reports no later than 7 years from the date of default on the original account. Nothing, I repeat…NOTHING, you do can lengthen that period of time. You can pay it, not pay it, dispute it, whatever…7 years is the limit.
Repossessions
Repossessions are another member of the 7-year club and must be removed from your credit reports no later than 7 years after the date of the original terminal delinquency. The terms “default” and “terminal delinquency” both refer to an account which has not been paid for 180 days or, in other words, an account which has become 6 months past due.
Charge-Offs
Charge offs can remain on a credit report for no longer than 7 years from the date of default on the account.
Foreclosures
Removal from a credit report is required after 7 years from the date of default. Are you seeing a pattern yet? Almost everything that is an account has to be removed 7 years from the date of the default.
Late Payments
Late payments must be removed from a credit report no later than 7 years after the date of the occurrence.
Judgments
According to the FCRA, judgments cannot remain on your credit reports for any longer than 7 years from the date filed. However, thanks to the National Consumer Assistance Plan (NCAP), most judgments will be disappearing from credit reports in July of 2017.
Bankruptcy
According to the FCRA a bankruptcy is permitted to be your credit reports for up to 10 years. Chapter 7 bankruptcies are removed 10 years from the date filed. Chapter 13 bankruptcies must be removed up to 7 years after the discharge, but not to exceed 10 years from the date filed. Since Chapter 13s often take 3-5 years to discharge they can remain on a credit report for a full 10 years. However, the credit reporting agencies have appear to have chosen to remove 13s when they are 7 years old, from the filing date, as long as they are discharged.
Tax Liens
Tax liens are one type of debt which has sharp teeth in the credit reporting department. Unpaid tax liens are permitted to remain on credit reports forever because there is no requirement in the FCRA to ever remove them. However, again thanks to the NCAP about half of all filed tax liens will be removed from credit reports in July of 2017.
Released tax liens do have an FCRA removal requirement – 7 years from the date of release. Withdrawn tax liens are treated differently. The credit bureaus currently remove withdrawn tax liens from credit reports nearly immediately as a matter of policy.
Student Loans
Defaulted federal student loans represent another type of derogatory debt which may remain on credit reports indefinitely. Federal student loan reporting is not governed under the FCRA. Instead, the reporting of these debts is addressed under the Higher Education Act. The removal of an unpaid federal student loan is not required.
Positive Accounts
Positive accounts are not addressed under the FCRA and there is no legal requirement for a positive account to be removed from a credit report, ever. Remember, however, that credit reporting is a voluntary process. The credit reporting agencies (CRAs) are free to exclude or remove information from credit reports at their discretion. Currently the CRAs’ policy is to remove inactive, positive accounts from credit reports after 10 years.