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.

Question of the Month – reporting a debt as paid-in-full

In an effort to help and educate as many people as possible, I thought it would be a good idea to occasionally write a blog post addressing common questions I get in consumer law, or debt collection, or similar areas of law. Here’s the question for this month:

Are there any rules for how long a collection agency has to report a debt being paid? I am infuriated after calling this company multiple times. They said it would take 30 days to post. Two months later, someone didn’t do their job and the paid-in-full status was not reported to the credit agencies. Now they give me assurances that they will send out a letter saying that the debt has been paid, in another 30 days. Do I have any legal recourse here?

Short answer: Yes.

Medium length answer: Yes, your legal recourse can be through the Fair Credit Reporting Act.

Long answer: This type of activity is exactly what the Fair Credit Reporting Act is meant to protect people against.

In this situation, the paid debt that’s still showing up as an unpaid debt to credit agencies is called a “derogatory tradeline.” It still shows up as a blip on your record when credit agencies look you up.

 

You can either hire an attorney at this point, or do this on your own. What you would do, or an attorney would do for you, is write a letter requesting an investigation of the derogatory tradeline. Send the letter to the credit reporting agency showing that the debt is unpaid. The credit reporting agency has 30 days to investigate.

 

If the investigation results in the credit reporting agency fixing the problem, you are done and the damage is fixed. If the investigation does not repair the problem, then you may be able to file a lawsuit under the Fair Credit Reporting Act.

 

Bingo bango. Done and done. People usually don’t recognize two simple things about these kinds of violations:

 

  1. You don’t have to put up with these “simple” or “negligent” mistakes by the credit reporting agencies. These kinds of mistakes aren’t meant to be tolerated, and there is legal recourse under the FCRA.
  2. You don’t have to pay an attorney to do a case like this. If the attorney knows what they’re doing, you shouldn’t have to pay an attorney up front to do this type of work. Why? Because the FCRA provides for attorney’s fees to the prevailing party.