How Long Do Derogatory Items Remain On Public Record?

Everything you do that effects your credit winds up on your credit report. There are no limits as to how long favorable credit history can stay on public record. As a result, good information on your report can and does remain on public record for many years.

However, derogatory information on your credit report is limited by law as to how long it may stay on public record. The Fair Credit Reporting Act (FCRA) was passed in 1971. The law, among other things, set limits for how long negative information could be reported.

Foreclosure

When you are not able to make payments on a home loan, the lender will take back the property used to secure that loan. This is known as a foreclosure proceeding. Foreclosures remain on your credit report for up to 7 years.

Bankruptcy

A bankruptcy can be either a Chapter 13, which is sometimes referred to as a bill payer bankruptcy, or a Chapter 7, which is a total debt elimination bankruptcy.

A Chapter 13 bankruptcy can be reported for up to 10 years by law, but typically they are removed after 7 years from the date of discharge. The reason is that lenders prefer to receive some money for their debt, rather than none. By dangling the carrot of less time for the bankruptcy to remain on their credit report, the chance of the Chapter 13 being successfully completed is improved by telling creditors it will only be reported 7 years.

A Chapter 7 bankruptcy can be reported up to 10 years from the date of discharge.

Late Payments

Late payments are usually not reported until they are at least 30 days past due. However, once that late payment is reported it can remain on your credit report for up to 7 years.

Collections

When a lender feels there is no hope of collecting a debt, they turn it over to an attorney or a collection agency for collection. The law limits the reporting of collection debts to 7 years from the time of last activity. It’s important to be aware of how this works, so you can manage a collection account on your credit report favorably.

A good example of the time of last activity would be an auto loan that had been turned over for collections 6½ years ago, and for some reason the debtor wanted to make a deal with the collection agency to pay it off now at a discounted price. The time of last activity then would be updated to the current pay off date, and the 7 years of reporting would start all over from then. (even though the debt had been paid off).

Also, you should be aware of a devious practice used by some collection agencies. Some agencies, when they are coming to the end of the 7 year period, will sell the debt for pennies on the dollar to another collection agency. Since the sale date to the new collection agency becomes the date of last activity for that account, the 7 years of reporting clock starts all over.

For this reason, anyone having a collection account on their record should monitor it closely. It’s not all that uncommon for an unmonitored credit report to have a collection account being reported for 20 years or longer.

Inquires

There are many times when you personally, or a creditor, a lender, an employer or potential employer, or a rental company asks for your credit report. These are called inquires and can stay on your credit report for 2 to 3 years.

If you apply for new credit, the inquire it generates is reported and will stay on your credit report for 2 to 3 years.

You will have multiple inquires when you are shopping for a particular type of loan. A home loan or a car loan for example. Even though there are multiple inquires showing up on your credit report, it should present no problem because it should be apparent that you only want one loan for the car or for the home. Try to confine your shopping period to a one or two week period when shopping for loans, so as make it clear to anyone pulling your report that you are in fact only after one loan. These inquires will stay on your credit report for 2 to 3 years.

Anytime you personally request or purchase a copy of your own credit report, it is not reported.

Your current creditors (especially credit card companies) will periodically check your credit reports to monitor your credit activity. They don’t want to be surprised if you are starting to have payment problems with other lenders or are going deeper in debt. These monitoring inquires also are not reported.

Public Record

Public record information includes any bankruptcies, foreclosures, judgments or tax liens against you.

Bankruptcies and foreclosures – Bankruptcies and foreclosures stay on the public record for 10 years.

Judgments – Judgments stay on your credit report for 7 years. Judgments are created when someone takes you to court in order to be paid for a debt, a loss or an injury. For example, if you fail to pay a medical bill, you could be sued for damages. If you lose the case, the winner receives a judgment against you, which means they may pursue strict measures against you in order to collect the debt. They may garnishee your wages or seize assets of yours.

Tax liens - If you do not pay your property taxes, the state can impose a tax lien on your property. If the lien is paid in full, it will remain on your record for 7 years. If the lien is not paid, it can remain on your credit report indefinitely

The way to clean derogatory information off your credit reports quickly and easily is to be informed. Terry Price helps you through the maze so you can raise your credit score 100 to 200 points in 90 days or less.