Your consumer credit report is arguably the most important document relating to your personal finances. Landlords, loan companies and potential employers may judge you in part by what's on your report. Cleaning up your credit involves paying down bad debt and waiting for old debt to roll off at its appointed time.
Consumer Credit Reports
A consumer credit report is a record of the management of your personal finances. There are three major credit reporting companies: Equifax, TransUnion and Experian. Each company keeps a record of your credit accounts, debts and credit inquiries on your credit report. Each company manages its own report information, and your credit reports may vary somewhat between the three agencies.
The Seven-Year Rule
The Fair Credit Reporting Act (FCRA) regulates how your credit report is used and how the credit bureaus handle your record. Debts on your consumer credit report stay on for seven years from the last activity on the account. At that time, the agencies remove the debt automatically. Creditors can remove a debt at any time for any reason by contacting a credit agency. However, they rarely do so unless you pay off the debt or work out a payment plan.
Exceptions
The FCRA allows exceptions to the seven-year rule. Bankruptcies, under both Chapter 13 and Chapter 7, stay on your credit reports for up to 10 years. Credit inquiries generally stay on your reports for about two years.
Removing Old Debt
Sometimes a debt appears on your credit report for longer than it should according to the law. For example, if a collection company buys your debt from the original creditor, it might report your debt again with a new date of last activity. Credit agencies can also confuse your information with that of another person, or there may be glitch in the system. Whatever the case, if you see something on your report that should have been removed, contact the credit agency and show it directly. You must contact each agency to have items removed from their reports.
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