Neg item on credit reports -7 yrs from original date or date of last activity?

Question

Hi, want to clean up credit (550 score) Do items stay on based on original date or date of last activity(such as payment)? I have paid off all but 2 collection accts and have car payment current. Have $347 debt from '04 and $1947 debt from '02. If I pay them off will it make them stay on longer? I would like to be able to buy a house in 3-5 years. Would a secured card help get my score higher? Appreciate your help. see note from Equifax on their site - is this true?
~Equifax is one of the leading credit reporting agencies in the United States -- there are two others. Account details, which are supplied by creditors with which you have an account, include the date the account was opened, the credit limit or amount of the loan, the payment terms, the balance, and a history that shows whether or not you've paid the account on time. Closed or inactive accounts, depending on the manner in which they were paid, stay on your report for 7 to 11 years from the date of their last activity.

Answer 1

Echo does a lot of research and knows her stuff. But I disagree with her answer. Would like to know the source if you have it please.

You need to understand that there are actually two types of reporting periods to be aware of. The credit reporting period is the time a credit reporting agency is allowed to post negative items to your history.

The Statute of Limitations is the legal time a creditor has to begin court action. In other words, once the SOL has run out, you no longer have a LEGAL obligation to pay the debt. While they can continue to try and collect from you, they can't sue you in court.

In Echo's response it's a little confusing. Maybe she's referring to a specific state law. But from my researching several states SOL laws, the most common definition for the beginning of the SOL period is the "last transaction date". In several states (including my state of Michigan) it goes on to specifiy that it is the "last time a charge or payment is made to the account".

Therefore, if you are a few years late on your payments, and suddenly make a payment to your account (no matter how small), it will restart the SOL date. That is why many of the sleezier collection agents like to talk you into paying a (good faith) payment of a few dollars toward your debt. It's probably already past the SOL, and once you have reset the date with your payment, they can begin legal action to collect the rest because you have just reset the "SOL clock".

While I've read that even offering to make a payment can restart the SOL, I've found from my research that this is very iffy, and many courts won't accept such an excuse to restart it. Since my state definds the "last transaction" it prohibits such a claim from being filed. But in some cases judges have ruled in it's favor.....so it's a "gray area" of the law you need to be aware of. Be carefull when negotiating with an old debt.

Now to answer your original question, we simply have to open our books to the Fair Credit Reporting Act. It very clearly states that the reporting for negative items is 7 years, beginning on the date of the delinquency. That means that if you owed a bill on January 1, 2000 and you missed that payment, that is the reporting date. The negative item must be removed in 2007. I have seen claims about 7 years + 180 days, and others that add 30 days.....these are wrong. The FTC ruled in a position statement that after the FCRA was amended in 2003, there were inconsistancies regarding this claim. They have ruled that the reporting period begins on the date of the delinquency....PERIOD. I can give you the source to this info upon request.

Your info from Equifix relates to "closed and inactive" accounts, which are NOT considered negative items, and you don't always want them removed. They establish a credit history for you, and that improves your credit score. It's the negative items we worried about. Note you don't want to have accounts listed as closed by the creditor, as it doesn't look good. Try to get those changed/removed through the dispute process.

So trust me...if those negative items are not removed within 7 years of the delinquency date you have grounds to sue the creditor for $1000 in small claims court (very easy to do).

Note that many creditors will attempt to "re-age" the debt by reporting the wrong date to the CRA;s. That includes last transaction dates, charge offs, or the date they received the account for collections. Examine your credit report carefully to be certain they did not change your delinquency date.

Answer 2

Without looking at your credit report, I cannot discern what's going on as to what's actually negatively reported. I think we can distill this paragraph into it's components.

Negative Items
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Negative items such as charge-offs, late payments and other items will stay on your credit report 7 years after its reported. So, if it was reported that in March 2005 the account was charged off then in March 2012 that item should be removed from your credit report.

But each negative item is separate, so if you have several negative items for one account over ti me, then it will take longer for those items to clear. Basically the nightmare will go away 7 years after the latest negative item on your report.

Bankrupcies though are considered the ultimate sin to creditors and they stay on your report for 11 years.

Credit Agencies & Report Information
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In the US, there are three major credit reporting bureaus, Equifax as you have mentioned, as well as TransUnion and Experian.

Yes, as indicated in your credit report description, those items are reported.

How to improve
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From the sounds of it without looking at your personal siutation in detail, you have had some trouble managing credit or run into some financial difficulty which prevented you from honoring your liability obligations.

Really, the only thing that will improve your score is paying your bills on time and waiting for the negative items to clear your report.

If you do need credit, a secured credit card with your score is in my opinion the only way to go. Banks will probably not issue you a normal unsecured credit card. The collateral backed card can be a stepping stone back to good credit.

Anyways, I hope that helps. I have put some secured card programs up from major banks. Try your bank to see what they offer as well.

Answer 3

You didn't mention what type of debt it is you are dealing with.

If it is from credit cards, the statute of limitations (SOL) for reporting starts from the first time you became 30 days late and never brought the account current leading to the charge off (date of first delinquency - DOFD).

The date of last activity that is listed on your reports is generally (if they are reporting correctly) 6 months after the DOFD.

The SOL for legally collecting the debt starts at the DOFD also.

It may be possible that you are past the SOL for collections in your state.

If you pay the delinquent debts without covering yourself, you may find that they will show as "paid" negatives, which is just as bad as unpaid.

((Also, in many states, if you pay you reset the reporting SOL. So they would show as paid negative for another 7 years.)) - ((WRONG info and I apologize to the OP)) - ((Yes Studly, you are correct, I erred in that comment. (note to self, don't answer questions at 6am after being up all night lol)
I had been thinking of the resetting of the SOL for collections and it came out as resetting the reporting SOL. My fingers just kept going with it and my brain was to tired to stop them. Thanks, Studly, for pointing it out so I could correct the misinformation and apologize))

A secured card would help. You might go to the Bank of America, Orchard Bank and HSBC sites and do the card selectors. Doing the selectors, they will not pull a hard inquiry on your reports. If you apply for a card that may be recommended, then they will pull a hard inq. Keep in mind that even if a card is recommended, you may not qualify for it.

Stay away from Cap One. They do not report your credit limit. They only report your high balance. That type of reporting will hurt your scores.

You should find out what the SOL is for your state. If you are out of SOL, send the collectors a debt validation letter. Send it certified mail return receipt. Then when you get the green card back, send a dispute to the credit bureaus.

After the collectors validate the debt or it has been 35 days, and you are positive you are out of SOL, send them a SOL letter. That basically tells them that the debt is uncollectable and to take a hike.

If you are still in SOL, send the debt validation letter and the credit bureau disputes. When you receive validation send a pay for delete letter (PFD).

Always send things in writing, never speak to anyone on the phone. Always send things to the collectors certified mail return receipt.

You might want to go to the site I've listed and do some reading in the newbie forum and then in the credit forum. Learn your rights. Learn your states SOL. You can also find info on the letters I've mentioned.

It is a free site, all of the info on that site is free to read and use.

Answer 4

Some banks will loan you the money for a house even with bad credit, slow credit and even bankruptcy. If you have a nice loan officer. He/She maybe able to help you remove items that are not supposed to be on their.

Answer 5

you will get rid of them 7 years from the 1st date of late charge. lots of the time you need to request it to be taken off (rather hardship-free) from the credit bureaus. in the event that they are not paid off, you're nonetheless obligated to pay, yet they don't checklist on your credit bureau.

Answer 6

Read some credit tips and articles on this site