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- By: JUSTIN HUTTO
- 3360
A common concern for people is "how long will a negative mark stay on my credit report?" The answer is a maximum of seven years. A bankruptcy or judgment can remain for 10 years depending upon the statute of limitations in your state.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?
Should a single slip-up deserve a seven year punishment? Should you have to live with a bad credit report for being out of work for a few months, even when we caught up on our bills soon after?
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.
Before Congress enacted the Fair Credit Reporting Act (FCRA) in 1970 the credit bureaus were not limited whatsoever in how long they could report negative credit information. In fact, they could keep bad credit on your record forever!
Finally, Congress placed a time limit on the bureaus. Please do not be confused that seven years is how long an item must remain on your credit. Seven years is the reporting maximum.
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.
Creditors and collection agencies usually just need a little encouragement from a compelling dispute letter or a good credit repair attorney. Plus, the credit bureaus perform credit repair on your report at the seven year mark.
In a perfect credit world negative marks would remain on a credit report forever. So long as they accurately reflected the credit worthiness of the applicant. Instead our credit reports are an excuse for creditors to assign outrageous interest rates and down payments.
The point is since we don't live in that world, why should we wait to repair our credit? Why shouldn't we take steps today to erase questionable and misleading information from our credit report? This way we don't have to pay the high cost of bad credit longer than we have to?
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