Credit Bureaus - Learn the Truth about Credit Reporting
October 3, 2008
Many people want to know how long a negative notation will stay on their credit report. The answer to this is seven long years. If you have a bankruptcy or judgment the notation can stay on your report for up to ten years.
The majority of people fell like they have just been handed a long prison sentence. During this time they are afraid to move into a home or upgrade to a nicer car because they do not want to be charged outrageous interest rates.
Seven years - why?
Is one bad decision deserving of a seven year punishment? Why do you have to live with the high cost of bad credit? The choice probably came down to paying a bill or providing for your family if you want to call that a choice.
Why is seven years the magical number? Has it been discovered that people will not make mistakes or run into financial hardship after seven years?
No, there is no solid reasoning behind the seven year reporting limit. It is a whimsical 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.
Creditors and collection agencies are not required to report a listing. This is completely voluntary on behalf of the creditors and collection agencies. Furthermore creditors and collection agencies have often removed negative marks before the seven year limit.
Often creditors and collection agencies just need some encouragement from a good credit repair attorney or a compelling credit dispute letter. In addition, the credit bureaus themselves perform a form of credit repair at the seven year point.
In a perfect world there would be no arbitrary reporting limit. Instead, marks would remain as long as they bore the true characteristics of the applicant. Credit information would provide accurate indications of our credit worthiness and not just give the banker an excuse to jack up interest rates so they can earn a bigger profit.
Just like there is no good reason for the seven year time limit for a negative notation to be on your credit report. There is no good reason why we should not make efforts today to remove negative information from our credit report.
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