Being
current on credit obligations bodes well for you in that it demonstrates your
ability to afford to meet immediate obligations, but the creditors are also interested
in your "past track record" because they fear that there may be a correlation
between past history and future expectancy.
To
remove derogatory information from your credit, your credit often has to stand
the test of time. You can improve your credit by resolving your accounts or by
remaining current on your obligations.
Staying
current on your obligations demonstrates that your finances are more stable and
that you can effectively manage your finances and your debt.
To
understand the rules that govern how long information can stay on your credit
report you need to understand the Fair Credit Reporting Act.
The
Fair Credit Reporting Act created rules that govern reporting of information as
it appears on credit reports. Initially, the parameters of reporting guidelines
in the Fair Debt Collection Practices Act were vague.
Most
information could remain on a consumer's credit report for approximately 7 years
(Bankruptcy could be reported for up to 10 years) but the limits of when the seven-year
period began and ended were not clearly defined.
In
1996 the Consumer Credit Reporting Reform Act was created to clarify the credit
reporting guidelines that are set forth in the Fair Credit Reporting Act.
In
accordance with the Fair Credit Reporting Act, the following information that
was reported to a credit bureau on or after January 1, 1998 is not permitted to
appear on a consumer's credit report.
Information
that was reported to a credit bureau earlier than January 1, 1998 may not be subject
to the same requirements.
Bankruptcies
that date back more than 10 years from the date of entry of the order of relief
from or the date of adjudication.
Civil
suits, civil judgments, or records of arrest that date back more than 7 years
from the date of entry or that exceed the statute of limitations.
Paid
liens that date back more than seven years from the date of the report.
Accounts
that were placed for collection or charged off which date back more than seven
years beginning 180 days after the last payment was due prior to the account being
turned over to collections or charged off.
Any
other derogatory information other than records of conviction for crimes that
date back more than 7 years from the date of the report.
The above referenced guidelines
are not applicable for any consumer report to be used in connection with any of
the following:
A
credit transaction involving or expected to involve a principal amount of $150,000
or more.
Underwriting
life insurance, which may be expected to include a value of $150,000 or more.
Prescreening for
employment of any individual at a salary of $75,000 or more.
Other consumer reporting guidelines:
Bankruptcy
For the protection of
the consumer, consumer reports are required to meet other guidelines. If the source
that provides information regarding a bankruptcy indicates what chapter was filed,
the reporting agency must include the chapter on the credit report.
Additionally,
if a bankruptcy is withdrawn before "final judgment" and the agency
has received information confirming that it was withdrawn, the agency must indicate
it on the consumer report.
Accounts
that are voluntarily closed by the consumer
When including information that is relative to a consumers account on a report,
if an agency receives verification that the consumer voluntarily closed the account,
they are responsible for indicating on the report, that the consumer voluntarily
closed the account.
Disputes
An agency is responsible
for noting that there is a dispute over information that is reported on a consumer
report if the consumer directly notifies the agency.
It
is the agency's responsibility to investigate and record the status of the disputed
information or delete the information from the consumer report.
There
is a 30-day time frame that begins on the day the agency receives the formal notice
of dispute from the consumer, during which the investigation must be completed.
If, during the course
of the investigation, the agency receives additional "relevant" information
pertaining to the dispute, they are responsible for extending the investigation
period for an additional 15 days.
The
agency does not have to provide a 15 day extension if, during the initial 30 day
period, it determines that the information that a consumer has supplied to support
their dispute is "inaccurate," "incomplete," or unverifiable.
If, after investigating
the dispute, the agency determines that the furnisher of the disputed information
(creditor) provided "inaccurate or incomplete," information, the agency
must correct the information as it is reported on the file, or delete the incorrect
information.
If information
is deleted as a result of a dispute investigation and it is in excess of three
days since receiving notice of dispute from a client, the agency must mail written
notice to the consumer of the results of the investigation within 5 business days.
The written notice has
to include a statement that the investigation is complete and a copy of the consumer
report that reflects any changes that resulted from the dispute investigation.
It must also include a notice advising that the consumer has the right to add
a statement to their file that disputes the "accuracy and completeness of
the information.
The agency
must provide a confirmation of the consumer's right to have the agency provide
notification to any person who previously had received a copy of the incorrect
report within 5 business days.
Specifically,
the agency must submit a copy of the corrected report to any person who received
the report within two years prior for employment purposes, and to any person who
received the incorrect report "for any other purpose" within six months
prior to the correction.
If the consumer requests, the bureau is responsible for including a description
of the procedure that was used to determine the accuracy and completeness of the
information within 15 days after receiving the request.
If
an agency deletes information as the result of the dispute within three business
days or less from the day that the agency received a notice of dispute from a
client, they may notify the consumer by telephone of the deletion.
The
agency is responsible for reviewing all the "relevant information" that
a consumer provides but they can end the investigation if the consumer does not
provide enough information to support their investigation.
The
agency may also terminate the investigation if they "reasonably determine"
that the dispute is "frivolous" or "irrelevant" and they must
notify the consumer within 5 days.
The
notification must include the reason for terminating the investigation and it
must identify information that is required to investigate the dispute.
When
an agency provides notification of the results of an investigation to a consumer,
they must include a notice that the consumer has the right to request that the
agency submit notification to other agencies through an automated system that
enables them to share information with other bureaus.
Reinserting previously deleted
material
Information
that has previously been deleted from a report file may only be re-added if the
creditor who is reporting the information "certifies" that the information
to be re-added is "complete and accurate."
Within
5 days of the reinsertion of information, the agency must notify the consumer
in writing. The agency is responsible for providing information identifying the
party that provided the information that lead to the reinsertion of information
on a report.
The agency
must also provide the address and contact information for the party who provided
the information, and they must provide notification to the consumer that the consumer
has the right "to add a statement disputing the accuracy and completeness
of the disputed information."
Consumer
reporting agencies are responsible for taking "reasonable procedures to prevent
the reappearance of information" that has previously been deleted.
Agencies
that maintain files on a nationwide basis must have an automated system that allows
parties who provided the information to the agency (creditor) to be able to report
"incomplete or inaccurate information," as determined by the investigation
to other reporting agencies.
Your
right to include a consumer statement
If you disputed information that appears on your credit report and the credit
bureau determines that you have not provided enough information to warrant changing
the report or deleting the information, you are entitled to prepare a statement
to be added to your credit report.
The
statement must be limited to 100 words. Preparing a statement will give you an
opportunity to fully explain the reason why you are disputing the information
despite the fact that you were unable to provide enough supporting evidence to
have the information changed or removed.
Guidelines
governing how creditors report information to the credit bureau(s)
PDF
