Negative Information Falling Off Your Credit Report

We’ve talked before about the difference between credit repair and righting consumer law violations here.

So with that in mind, let’s talk about a commonly discussed issue that comes up regularly when negative information pops up on credit reports. What does it mean when someone tells you “Don’t worry about that ding on your credit report, it’ll drop off in 7-10 years”?

First of all, what’s a ding on your credit report?

Any negative information reported accurately or inaccurately on your credit report. Remember that inaccurate information on your credit report, such as an entry that suggests a debt wasn’t paid off when it actually was, can be addressed and fixed through the Fair Credit Reporting Act. If you have wrong information on your credit report, truly-wrong-and-not-just-wishful-thinking-wrong, you should go through the process to get it fixed, starting by reading my post on what the Fair Credit Reporting Act here.

Now we come to accurate negative information on your credit report. Maybe you missed a few rental payments on your apartment, or you didn’t pay your credit account at Sherwin Williams (that’s an actual case), and those debts were turned over to collections. Those are “dings” on your credit report. Those types of entries are negative information that can affect your credit score.

So do these dings really fall off your credit report at some point?

Yes and no.

15 U.S.C. 1681c(a) lists each entry that has a shelf life on a credit report. No credit reporting agency may generate a credit report with the following information:

  1. Bankruptcies older than 10 years (time begins when the order for relief is entered)
  2. Civil suits, civil judgments and records of arrest older than 7 years (time begins on the date of entry)
  3. Paid tax liens older than 7 years (time begins on date of payment)
  4. Accounts placed for collection older than 7 years
  5. Any other “adverse item of information” older than 7 years (except for convictions for crimes)

There’s the official list of dings that do fall off your credit report after a certain amount of time. There are exemptions and more details surrounding timing of when the clock begins to run, of course, but hopefully this provides some good, basic information when you spot a ding on your credit report.

#1 Thing You Should Do When Your Bankruptcy is Over

Filing for, and completing, a bankruptcy is usually not at the top of most people’s lists for “number one fun thing to do.” It’s often the last resort, I’m-drowning-in-medical-bills, I-don’t-see-any-other-way-out option.
But if you have to do it, you do it. You wipe clean your financial slate with a bankruptcy. Any creditors claiming you owe them money have to get their claims in by certain deadlines, and you have a structured payment plan on how to get everyone paid back, or no repayment plan at all.
A bankruptcy is a one-shot opportunity to wipe the slate clean, so shouldn’t you make sure that slate is completely clean?
The number one thing you should do to make sure you are starting on a blank page after your bankruptcy is over is to check your credit reports a few months after the bankruptcy is done. You need to make sure there are no outstanding accounts on your credit report that were supposed to be erased by the bankruptcy.
After all, if you went to the hassle of filing for bankruptcy, shouldn’t you get the full benefit of a bankruptcy?