What is the truth concerning the 7 year rule with credit?

Question

I have been looking at different questions and answers concerning credit and how something negative will be erased from your report after seven years. Some people are saying it's 7 years after the start of the account, some are saying 7 years after the last payment. What is the truth and where can I find it for myself? I am trying to get my credit established and I want to know all that I should now.

Answer 1

Usually for late payements it's 3 years, 7 years, for charge-offs, repossessions, foreclosures, and judgements, and 10 years for bankruptcies.

Another thing, the reporting period runs 7 ½ years (7 years plus 180 days) from the date (month and year) of the last delinquency (known as "last missed payment:).

So, regardless of how long a creditor waits to charge off, sell or transfer a debt, they must report the true and correct "delinquent or last missed payment" date (month and year) that preceded the creditor's action.

I'll give you an example:

A payment was due on January 10, 1998 but, you failed to make that payment and never made another payment. The Creditor waits until August 98 to take action (charge off, send to collections, sell/transfer debt, etc.) on the debt.

The 180 day count began on January 98, (your last missed payment month) and runs until July 98 at which time the seven (7) year reporting period begins and runs until July 2005.

Here's how Bankruptcies work

The fair credit reporting act allows bankruptcy to be reported for up to 10 years. The key word is "allows" because it is NOT mandatory for credit reporting agencies to report the bankruptcy for the full 10 years. Each credit bureau has its own internal policy on how long it reports any bankruptcy but as a general rule, Chapter 7 is reported for 10 years and chapter 13 for only 7 years.

The reasoning behind this difference in the reporting periods is under chapter 13 you pay at least some of your unsecured debts while chapter 7 relieves you of paying anything thus the longer penalty.

Bankruptcy is reported for 7 or 10 years from the date the bankruptcy is discharged (otherwise known as the "Order of Relief" date) or from the date the bankruptcy case is adjudicated.

Example Chapter 7:
You file bankruptcy on January 10, 2003 and receive a discharge on May 30, 2003. The bankruptcy remains on your credit report until May 2013. (10 years)

Example Chapter 11:
You file bankruptcy on January 10, 2003. You receive confirmation of your chapter 11 plan on March 15, 2003. The bankruptcy remains on your credit report until March 2013. (10 years)

Example Chapter 12 and 13:
The court normally grants the discharge as soon as practicable after you complete all payments under your repayment plan (typically 3-5 years).

So, you file bankruptcy on January 10, 2003 and you begin making payments a couple months later. You complete your repayment plan on March 1, 2006 (3 years later) and the court grants your discharge 70 days later on May 10, 2006. In this case, the bankruptcy remains on your credit report until May 2013 or 2016. (7 or 10 years from the discharge date depending on the credit bureau's policy)

Generally, you don't need to do anything to have a bankruptcy removed from your report once the reporting period expires. However, it's always a good idea to verify that the bankruptcy has been deleted. Find out what the policy of the CRA is (7 or 10 years) and then, if it has expired but not removed, send a letter to the credit bureau requesting the bankruptcy be removed.

Answer 2

It is 7 Years from the date of last activity. This is generally your last payment or purchase. If at anytime during this 7 years you make a payment or even an agreement for payment 7 year counter starts all over again.

So if you opened an account in 1990 and continued to pay on it until 12/2000 when your account was turned over to collections. The negative information will still show up on your report until12/2007.
You do have to watch this because some companies will try to Re-Age the account when they sell it off, but the 7 years still count based on the original account.

Specific items will remain on your 10 year such as Bankruptcy's. These will remain for 10 years from the date you filed for Bankruptcy.

However, more weight is put to your recent history, so a Late payment 2 years ago is going to have a lot less effect than a late payment last month.

If you want interesting reading you can read the Fair Credit Reporting Act(FCRA) and get all the details

Answer 3

Looks like you are getting mixed results to your question....soooo... let's go straight to the FTC for the answer
http://www.ftc.gov/bcp/conline/pubs/buspubs/infopro.htm
Read #6

(It also looks like some are confusing the issue and mixing the collecting SOL with the reporting SOL. Two different things.)

To re-cap the reporting SOL:
With credit cards, it starts from the first time you became 30 days late and never brought the account current leading to the charge off.
If after you are 30 days late and you make a payment that "does not" bring the account current - it still goes by the "first" 30 days late.
If after you are 30 days late and you make a payment that "does" bring the account current - it goes by the "next" time you become 30 days late and never bring it current.

For a loan, it starts from your last payment
For a medical, it starts from the day of treatment that created the debt.
For repo's, it starts on the date the repo was sold creating the deficiency.

The reporting SOL is 7 years !!!!
Not 7 years and 180 days.
The FTC only allows the credit reporting agencies (CRA's) the extra 180 days for "possible" inaccuracies of the obsolesence date from the data furnisher.
The CRA's will generally delete the trade line at the 7 year mark. If it remains past that time the person has the right to dispute the trade line as obsolete.

The reporting SOL "cannot legally" be re-aged.
If a payment is made to the original creditor or a collection agency "after" the account is charged off - it still goes by the original obsolesence date.

If a person makes a "new contract" to pay a charged off debt - for example they accept a "new" credit card, from the collection agency, that carries the total debt or a portion of the debt, then the old debt begins as a new account and will have a new SOL if defaulted on. That would not be considered re-aging since the debt would be considered a new account.



The collecting SOL for credit cards varies by state.
Some states start on the first 30 day late and the account was never brought current leading to the charge off.
Other states go by the last payment or charge made to the account before the account is charged off.

In some states, after an account is charged off, even if a payment is made, the SOL remains running from the original date until it has passed.
In other states, after an account is charged off and a person makes a payment or an agreement to pay (usually in writing) the SOL starts as new.

Answer 4

Ok to keep it simple and to the point without directing you to about 1000 links....the hard facts are...

7 Years from your last payment if its a regular collection account.

But if they have sued you and there is a judment on your account and opposing counsel filed for an abstract of judgment for 10 years. Than its 10 years. And in some states...like California they can renew it every 10 years.

Good Luck

Answer 5

The answer to your question varies state to state and by form of derogatory credit. Collections and judgments have different terms than say late payments. An excellent source to get all the answers is a free report offered at www.guaranteedcreditboost.com

Answer 6

It is seven years after you missed your first payment (the account became delinquent).