Negative credit must be removed from your credit report within a specified time period due to provisions within the Fair Credit Reporting Act or the FCRA that was enacted into law back in 1970. This law came about in order to protect consumers from unfair credit reporting.

The majority of credit reports contain some types of errors. If you happen to find some inaccuracies or mistakes showing on your report you can send in a dispute and attempt to get them removed. The credit bureaus must verify the accuracy of their information within a 30-day period following receipt of your dispute or they must delete the disputed information.

But if the information is completely truthful and accurate it should remain on your report for a specified period of time that has been established by the FCRA. When the statute of limitations runs out the negative item must be removed.

All of the time limits for reporting begin at the time of the first date of delinquency. Therefore any payments, partial payments or other types of activity on the account will not affect the reporting. There are however, two items that can stay on the report forever if they never get paid and that is an unpaid tax lien and unpaid Federal student loans. If these items are paid off though, they will be removed after the typical time limit passes.

The majority of negative credit items are scheduled to be deleted from your credit report in 7 years from the date of the first delinquency regardless of whether they are ever paid off or not. In the case of multiple late payments on one account, each late payment will be treated separately and will drop off 7 years from the day it was late. A chapter 13 bankruptcy should also be deleted after 7 years along with tax liens and student loans that have been paid in full.

In the case of a charge-off and most collection accounts the time period is 7 years plus 180 days from the date of first delinquency. That is because it typically takes at least 180 days for the original lender to charge-off the delinquent debt. Even though collection accounts are often passed along to different collectors, these exchanges cannot affect the reporting on your credit report. All of these types of items must drop off the credit report in 7 years plus 180 days from the date of the first delinquency.

There are a couple of variances from the 7-year rule. A bankruptcy that is a chapter 7 must remain on the report for 10 years. Of course, unpaid tax liens and unpaid Federal student loans can stay on there forever. As for inquiries, a soft inquiry, which is what happens when you look at your own report, does not affect the report but all hard inquiries from lenders stay on the report for 2 years.

It takes time but even if you do nothing eventually all of your bad credit will be removed from your credit report. However, while you are waiting you can take some steps to make improvements and raise your credit score. The most important thing however, is to keep your credit good so that when the bad credit drops off you can again have excellent credit.

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All of the three major credit bureaus issue their own credit report. If you want a summary of all of the reports combined you can get a 3 in 1 report. The 3 in 1 report comprises the financial history of an individual or a group in order to “report their credit-worthiness”. It is an estimate of whether or not they have the reliability to repay a new debt.

A 3 in 1 report provides information from all three of the major credit-reporting agencies. Many financial organizations use the 3 in 1 report to assess an individual’s credit reputation to see if they will meet the credit guidelines set by the financial institution to extend credit. The report is also used to set the terms of the loan.

The United States has three major credit reporting agencies and they are TransUnion, Experian and Equifax. In the United Kingdom the big three are Experian, Equifax and Call Credit. If you are a consumer from the United Kingdom you can have access to your Call Credit credit reports right on the Internet.

When reviewing a 3 in 1 credit report it is imperative that one comprehends what the credit score entails. A credit score is a mathematical index that represents an estimate of an individual’s credit worthiness. Many lenders will use the 3 in 1 report rather than the individual bureau reports in order to determine whether or not to loan to a person and what that person’s credit limit should be and even the interest rate that they will charge.

Credit scores in the United States are typically calculated by using a mathematical formula developed by the Fair Isaac Corporation. This is known as a FICO score. All three of the major credit-reporting bureaus in the United States use variations of this same scoring formula but occasionally you may hear it called by another name like the Beacon score or the Emperica score.

The credit scores or the FICO scores on any credit report including the 3 in 1 reports were designed to measure the apparent risk of default on a loan by considering a number of variables. The main variables that are considered are the current and ongoing debt, punctuality of payments in the past and the ratio of ongoing debt related to available credit, the length of the person’s credit history, the types of credit used and all of the details of any credit that has been applied for in the recent past.

Many people believe that an individual’s current income and their employment history can affect their FICO scores, however, those two variables are irrelevant when it comes to determining credit scores. FICO scores range between 300 to 850. Any credit score that is higher than 720 on a combined 3 in 1 report is considered to be a good risk while any score that is below 600 is considered a bad risk.

When you improve or repair the credit on all three of the major bureaus reports you will automatically improve your 3 in 1 report. You can receive a copy of the 3 in 1 report but most often you will be required to pay a small fee.

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Back in 1970 the Fair Credit Reporting Act or the FCRA was put into law in order to protect consumers from unfair and fraudulent credit reporting. Among the provisions of the law were some distinct limitations on how long negative credit can be reported.

If you have mistakes and inaccuracies showing on your report, you have the right to dispute the information and attempt to get it removed. The credit bureaus will have 30 days from the receipt of your dispute in order to verify the accuracy of their information or completely delete it from your report.

Unfortunately, the truth is that if you have accurate and truthful negative credit it should stay on your report. However, it cannot stay forever and must be deleted when the statute of limitations runs out. The FCRA has defined the time limit for reporting for all types of credit problems.

Many people may mistakenly believe that all reporting is from the last date of activity on the account. But this is not true. The time limit begins as soon as the date of the very first delinquency and ends after the time limit has passed. There are two exceptions to this rule though and that is unpaid tax liens and unpaid Federal student loans. These items can remain on the report forever unless they are paid off and then they will drop off within the time limit.

Most items will automatically drop off your report 7 years from the date of the first delinquency regardless of whether they are ever paid off or not. If there are many late payments on one account, each late payment mark will be treated individually and will drop off according to the date of the late payment. If you have tax liens or student loans that you have paid in full, these will drop off in the 7-year time period as well as a chapter 13 bankruptcy.

Charge off’s and collections are treated a little bit differently. Both of these items will drop off in the 7 years but with the addition of 180 days since it usually takes that much time after the first delinquency for the item to actually be charged off. Most collection accounts have actually been charged off from the original lender so of course, they are treated the same and even though collection accounts are often passed around to different collection agencies, the time limit for reporting never changes, they must drop off at 7 years and 180 days from the date of first delinquency.

A time limit for a few items varies from the 7-year rule. A chapter 7 bankruptcy must stay on the report for 10 years. Tax liens and Federal student loans that are still delinquent will stay on the report indefinitely. If you pay them off in full the typical 7-year rule applies. Also any hard inquiries into your report remain there for a period of 2 years.

While time will eventually repair all of your credit problems there are some steps you can take in the mean time to repair your report and improve your credit score. And always, once you make improvements and repairs you must be steadfast in keeping your report clean and as time passes all of your bad credit will be in the past.

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TransUnion, Equifax and Experian are the big three credit rating agencies in the United States.

Each have their own credit report, their own credit scores and their own records.

They all collect the information on you and your history.

Their profits come from sharing that information with banks, mortgage lenders, potential landlords and even sometimes employers and insurance companies.

You can get a free credit report one time each year from each company and it is a good idea to make sure that you get all three. Check out annualcreditreport.com for more info.

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Probably not if you look at it from a personal perspective. Good credit offers you peace of mind, security and more but….

Your credit can be too good to get a credit card these days.

Card issuers have counted on profits for years from penalty fees and high interest rates paid by the consumers who carry a balance. But the recent recession and the CARD legislation has forced a decline in profits from this source. The industry has had to write off billions of dollars of bad debt and the new Federal laws have seriously curtailed how much credit card companies can charge risky customers and how they can randomly increase interest rates.

If you are a customer who owns a credit card but pays off the balance every single month to the credit card companies you are essentially a “deadbeat”, not because you ever fail to make your payments but rather because the credit card companies are not making any money on you. You are worthless to them. No need to give you a card.

And people with stellar credit have been denied credit cards for that very reason.
A recent lawsuit brought by outdoor retailer Gander Mountain, from Minnesota, claims that the credit card partner they affiliated with, World Financial Network, was turning down shoppers who had nearly perfect credit scores of 800 and above. The issuer claimed that it could not make money from those clients and those clients comprised as many as a quarter of the new applicants.

Sounds like with credit these days, you may be damned if you do and damned if you don’t too.

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Some surprising and important facts about credit scores…

· Your income level does not affect your score. Never. Income level is completely irrelevant when it comes to your credit score. But….on most purchases your income level will affect whether you can qualify or not. Most lenders will take into consideration many factors including your credit score and your income and job history.
· The length of your credit history is important. Don’t close old accounts even if you are not using them because you need as much history as you can get.
· Beware of paying off or even paying towards old collection accounts, especially if it has been charged off. While the date of your first delinquency counts, the date of last activity also counts. Either way the negative impact reduces over time so you may want to consider whether you want to focus on building new and good credit or if you want to pay off old credit. The new and good credit may serve you better for your future.
· Your debt to available credit ratio is crucial. Do not let it go over 20% and you may even want to keep it less than that for the highest credit scores.
· Skip the credit offers at your local department store and don’t shop around for credit unless you are absolutely serious about getting it because every single inquiry into your credit decreases your score.

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The current financial-reform bill that is being debated in Congress right now will allow consumers to actually get their credit scores along with the free credit reports that they can now get.

Previously, a consumer could pick up a free copy of their credit report but they had to pay a fee of $15.00 in order to actually get the score.

Knowing your actual credit score could make your credit repair efforts easier as you will know and be able to see immediately the effect on the number that all of the lenders look at and depend on.

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The FCRA or the Fair Credit Reporting Act allows you as a consumer to add favorable information or explanations to your credit report.

If you do not have any credit history you may consider adding unreported paid debts, rent payments or utility payments. If you have bad credit but feel you could benefit from explaining the circumstances you can add some information telling your side of the story.

The credit bureaus may charge a small fee however the benefits would override the amount of the fee.

Contact the credit bureaus by certified mail asking for them to contact the creditors and request approval to list the accounts that may have not been reported previously.

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And it can still show up on your credit report.

Depending upon your lender and oftentimes depending upon your past history even a barely late payment can show up on your credit report, bringing your credit score down as much as 60 to 100 points.

There is a myth out there that a payment must be 30 days late in order to be reported but reporting is always at the discretion of the lender and if they choose to do so they can report you late when you are even just a day late. And the really unfortunate thing about that is that anything from 1 to 30 days late is considered 30 days late (yes, I know, doesn’t even seem fair at all!) and anything from 30 to 60 days late is considered 60 days late (again, doesn’t seem fair at all).

However, you may get away without having it reported on your credit. Your lender may decide not to report. They may have a policy not to report until it is really 30 days late or at least until it is out of any “grace’ period. Or they may consider your past history and if you have never been late before they could decide not to ruin your credit for an anomaly. But if you are consistently a day or two or three late they are more likely to report it.

But even if you get away with a payment that is a day or two late by not getting it reported on your credit report, you will not get away without a late fee. The late fee will be assessed no matter what, one day, one hour, one minute late, and you will be charged a late fee. The credit card companies especially will not let that slide by because they have to keep up their profits.

see Even Barely Late

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There may be some instances in which you would want to control who can access your credit report. Instances such as a divorce or other type of court proceeding or if you have a concern about identity theft you may want to make sure that no one is able to access your credit report without your explicit authority.

In that case you will want to put a “security freeze” on your reports. A security freeze is designed to prevent the credit-reporting bureau to release your report without your consent.

However, you must also realize that if you want to obtain credit you must plan ahead as you will need to use a specific personal identification number that the bureau provides for you and a special password in order to authorize the temporary release of the information.

That means you probably cannot get credit at the point of sale and if you need anything that requires credit such as insurance, a cell phone change, utilities, a digital signature, an Internet credit card transaction or anything like that you need to plan ahead.

For information on how to request a Security Freeze in your own state, check out the Experian website. You may also want to check out TransUnion and Equifax for details on their reports.

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