How to Determine If an Item Has Remained
on Your Credit Report for Too Long
By Michelle Black, CreditWriter.com
Overcoming past credit problems can be a long and tedious process, especially if you are working alone without professional assistance. Thankfully, in most cases negative credit information is not allowed to haunt you forever. There is a strict time limit which dictates how long your past credit mistakes can show up on a credit report.
What Determines When Items Are Removed from Credit Reports?
Credit reporting is a voluntary process. There is no law which requires a creditor or collection agency (aka data furnisher) to supply information to the credit reporting agencies (CRAs). There is no law which requires the CRAs to accept information or add it to your credit reports either. However, if a data furnisher supplies information and if a CRA opts to include that information on your credit report, everyone has to play by the rules.
The Fair Credit Reporting Act (FCRA) provides set-in-stone guidelines to the credit reporting agencies— Equifax, Trans Union, and Experian—and to data furnishers alike. These guidelines dictate, among other things, when an item must be removed from a credit report. The date of required removal is known by a few names: the “FCRA compliance date”,”purge date.”, and “the anchor date”. Depending upon the specific credit report item in question, the purge date will differ.
The CRAs rely on the information provided to them from data furnishers in order to determine the purge date for an item included on your credit report. (The exception to this rule is public records, like bankruptcies, where the credit reporting agencies proactively seek out information themselves and a traditional data furnisher isn’t involved.)
Here is a guide to help you determine when an item should be purged from your credit reports.
Inquiries – After a period of 2 years, inquiries are removed from your credit report by the credit reporting agencies (CRAs). The FCRA [15 USC Sec. 1681g] (a)(3)(A) requires that the CRAs maintain a record of employment inquiries for a minimum of two years and other inquiries for a period of one year. As a policy the CRAs maintain most inquiries, regardless of their purpose, for two years.
It is also worth pointing out that, although an inquiry may remain on your credit reports for up to two years, it may only be factored into your credit scores for 12 months.
Charge-Offs – These accounts must be purged from your credit report after seven years from the date of charge-off.
Judgments – After seven years from the filing date, a judgment is required to be purged from your credit reports per the FCRA. Yet, at least for now, the CRAs have voluntarily opted to stop including judgment information on credit reports.
The decision to initially remove some and eventually all judgments from credit reports came about as a result of the National Consumer Assistance Plan (NCAP)—a settlement made between the credit reporting agencies and 31 state attorneys general.
Repossessions and Foreclosures – The purge date for repossessions is seven years from the date of the original terminal delinquency (when the account became six months past due without being brought current again) on the original loan.
Collections – Collection accounts must be purged from your credit reports after a period of seven years from the date of default on the original account. Collection agencies are not legally permitted to tamper with the purge date in any way. This practice is known as “re-aging” and is prohibited under the FCRA.
Released Tax Liens – Tax liens which have been paid and released must be purged from your credit reports after a period of seven years from the date of release according to the FCRA.
Although not required under federal law, the CRAs have voluntarily opted to stop including tax liens on credit reports as a result of the NCAP settlement agreement.
Chapter 13 Bankruptcy – The purge date for a chapter 13 bankruptcy is seven years from the date the bankruptcy is discharged. However, as it can take several years for a repayment plan to be completed, the maximum amount of time a chapter 13 bankruptcy may legally remain on a credit report is 10 years from the date of filing, even if seven years from the date of discharge has not yet passed. Credit bureau policy is often to remove a Chapter 13 after seven years from the date of filing.
Chapter 7 and 11 Bankruptcies – Chapter 7 and 11 bankruptcies must be purged from your credit report no later than 10 years from the filing date.
Non-Discharged and Dismissed Bankruptcies – These two categories of bankruptcies are also required to be purged from your credit reports after 10 years from the filing date has passed.
Federal Student Loans – The FCRA does not govern how long negative student loan account information is allowed to remain on your credit reports. Instead, federal student loan credit reporting is governed by the Higher Education Act. Unfortunately for consumers, unpaid federal student loans are never required to be removed from your credit report.
Unpaid Tax Liens – There is no purge date associated with unpaid tax liens. In other words, unless you pay a tax lien it can remain on your credit reports, damaging your credit scores forever.
Nonetheless, the CRAs have also voluntarily opted to stop including unpaid tax liens on credit reports, at least for the time being, as a result of the NCAP settlement agreement.
What to Do about Re-Aging
If an account shows up on any of your credit reports beyond what you believe to be the legal purge date, you may be the victim of a practice known as re-aging. Re-aging occurs when a data furnisher (usually a collection agency) either accidentally or purposely reports an incorrect purge date to the credit reporting agencies.
Re-aging can be disputed with the credit reporting agencies directly under the Fair Credit Reporting Act. It may be helpful if you can provide proof as well. You can submit disputes on your own or with the help of a credit repair professional.
Want professional help addressing credit reporting errors? CLICK HERE to find a NACSO accredited credit repair company in your area.