Debt Reporting

Debt reporting takes place when a creditor reports your accounts and payment history to the credit bureaus. Most creditors report monthly, but some report less frequently. The credit bureaus place the information from the creditor onto your credit report. The information your credit report contains does not appear forever. You have a legal right to dispute inaccurate or outdated information that appears in your credit file.

The Facts

When you apply for a credit card, make a mortgage payment, or seek financing for a new car, these financial transactions all appear on your credit report. Your credit report is a profile of how well you manage your debt. Lenders review your credit history to determine your eligibility for loans or lines of credit. When you are approved for a debt, your lender will make regular reports of your payments (or lack thereof). These reports constitute your payment history and contribute largely to your credit score.

Types

Although several categories of debt exist, a debt can only impact your credit score as a positive or negative account. Unfortunately, positive and negative accounts do not affect your credit score equally. One negative account deducts more points from your score than one positive account adds. Because of this fact, it is vital that you pay your debts on time and regularly monitor your credit report for fraudulent activity.

Time Frame

The Fair Credit Reporting Act (FCRA) maintains guidelines that each credit bureau must follow when reporting debt. One of these guidelines is the amount of time a debt can remain on your credit report. Positive closed accounts help your overall score and may remain for ten years. Negative closed accounts and collection accounts are restricted to a reporting period of seven years. Foreclosures also only report for seven years. Unpaid judgments report for seven years as well unless they are renewed. A judgment that is repeatedly renewed may appear on your credit report for up to 20 years. Bankruptcies are removed after seven to ten years, depending on the type of bankruptcy filed. Older debts impact your score less than more recent debts.

Disputes

Review your credit reports regularly for mistakes. If you find a mistake, you can dispute it to have it corrected. Send a letter explaining the inaccuracy and a copy of your credit report to the credit bureau that is reporting the information. Also send any added documentation that you have to support your claim. The FCRA grants the credit bureau 30 days to conduct an investigation of the supposed inaccuracy. After 30 days, you will receive a letter explaining what actions were taken by the credit bureau to remedy the situation. If changes were made to your credit report following the investigation, you will also receive an updated copy.

Violations

If you successfully petition for an inaccuracy to be removed from your credit report and it reappears, the creditor must be able to provide written proof that the debt belongs to you. Credit bureaus have neither the time nor the manpower to verify that each debt being reported is legitimate and original. The bulk of the responsibility for ascertaining that your credit report is accurate falls upon you. In addition, no debt can be reinserted after its reporting period has expired. Even if the debt is sold to a new company, that company may not make a notation concerning the debt on your credit report after the original reporting period. Whether or not the debt is yours is irrelevant once the reporting period is over. You can dispute reinserted debts with the credit bureaus to have them removed.