Advice on Credit Report Update & Paying a Loan

How long does it take for credit report to update after paying off an auto loan?

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Bill's Answer: Answered by Mark Cappel

Thank you for your question about credit reports, how they update, and your auto loan.

Not Every Lender Reports on the Same Cycle

The answer to your question depends on the lender who is reporting the information to the credit bureaus. The typical credit reporting cycle is 90 days, or quarterly — so even if they update your record within 14 days, it is likely that it will not show up on your credit report until the next cycle (or several months in the future). There is quite a bit of information on Bills.com regarding credit reporting and credit reports.

Most Banks Update Your Report Every Month

Many of the larger banks and finance companies report updated information to the credit bureaus every month. However, some smaller financiers only report on a quarterly basis. Depending on the lender, it could take as long as 90 days for updated account information to appear on your credit reports. If a particular account that you have resolved is causing your problems with your credit score, you can dispute the listing with the credit bureaus, which can speed up the reporting process. The credit report dispute process is important to understand because credit reports are notoriously inaccurate, and creditors are often very slow to report current and accurate account information.

Each of the three credit bureaus (Experian, Equifax, and TransUnion) allow consumers to dispute credit report listings online; you can access each of the credit bureaus online through AnnualCreditReport.com where you can also request a free copy of your report from each company.

Fair Credit Reporting Act at a Glance

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies (CRAs). The specific law is called the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer’s credit report for up to 7½ years. To determine when an account will be removed by the CRAs (TransUnion, Equifax, and Experian and others), add 7 years to the date of first delinquency. The date of first delinquency is shown in credit reports. Subsequent activity, such as resolving the debt or one debt collector selling the debt to another collector, is irrelevant to the 7-year rule.

Some debts have a reporting period longer than 7 years, including:

  • Tax liens: 10 years if unpaid, or 7 years from the payment date
  • Bankruptcy: 10 years from the date of filing (15 U.S.C. §1681c)
  • Perkins student loans: Until paid in full (20 U.S.C. §1087cc(c)(3))
  • Direct and FFEL loans: 7 years from default or rehabilitation date (20 U.S.C. §1080a(f)(1) and 20 U.S.C. §1087e(a)(1))
  • Judgments: 7 years or the debtor’s state statute of limitations on judgments, whichever is longer

The FCRA 7-year rule is separate from state statutes of limitations for debt issues. Learn the lifespan of a judgment in your state at the Bills.com Statute of Limitations Laws by State page.

The start of the 7-year period begins at the date of first delinquency, or if no payments are made, when the first payment was due. Review your credit report carefully to make certain the dates of first delinquency are reported correctly. Unscrupulous collection agents reset the date of first delinquency to stretch out how long a derogatory account appears on consumer’s credit report. This is illegal under the FCRA.

Just because a debt does not appear on a credit report does not mean the statute of limitations for the debt has passed. The opposite is also true: The passing of a state statute of limitations on a debt does not mean the debt may not appear on a credit report. The federal FCRA and state statutes of limitations are separate and independent of each other.

Whether a debt appears on a credit report does not establish legal liability for the debt. The opposite is also true: You may have legal liability for a debt not reported to the credit reporting agencies. Credit reports are not legal records of every debt a person owes.

Statute of Limitations

Just because a debt is removed from a credit report does not mean the statute of limitations for receiving a judgment to collect the debt has passed. Federal credit report laws and a state statute of limitations laws are separate and independent from each other. The seven years starts running from the date of first delinquency, which generally means seven and a half years from the date of last payment. Review your credit report carefully to make sure that the dates of last payment being reported on these accounts are correct.

The law stating that derogatory items must be removed from credit reports after seven years is designed to help consumers recover from past credit mistakes and help them rebuild their credit rating. If you find charged-off accounts appearing on your credit report after seven years, you may want to dispute the incorrect listings with the credit bureaus.

Federal Trade Commission & Disputing Credit Report Errors

Some creditors, especially debt purchasing firms, will report inaccurate charge-off dates to extend the amount of time an old account appears on your credit report. If you find any inaccurate information, you should dispute the credit report listing with the bureau in question. See the Federal Trade Commission document FTC Facts for Consumers: How to Dispute Credit Report Errors for more information.

The seven-year rule only applies to derogatory items, not to accounts that you are keeping current, or which you closed in good standing. As long as an account is not considered derogatory, it can remain on your credit report indefinitely. In fact, even accounts that are no longer reporting to the credit bureaus may continue to appear on your report as long as the account is not a derogatory item. It is common to see positive items that are more than 20 years old appearing on a credit report.

I hope this information helps you Find. Learn. Save.

Best,

Bill

Bills.com

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Comments (25)


Manshein T.
Goodyear, AZ  |  March 18, 2014
I just paid off my car loan. I have a print-out listing all of my payments. How can I add this to my credit report since the lender did not do it? I want to boost my credit score. My payments were on time and sometimes more and earlier than I had to. What can I do?
Bills.com
March 20, 2014
Consumers cannot report their account information to Equifax, Experian, or TransUnion, which are the big-three consumer credit reporting agencies. The information needs to be reported to consumer credit reporting agencies by the creditor directly.

Under the FCRA, creditors are not required to report account information to the big-three consumer credit reporting agencies. If a creditor chooses to report, they may report to only one or two and not all three.

A creditor must meet strict criteria to report, update, and verify account information to the consumer credit reporting agencies. Additionally, creditors must bear significant costs related to compliance, technology, and reporting standards. It's financially unrealistic for some small businesses to report account information to the consumer credit reporting agencies.

You can add a statement of up to 100 words to your credit report. Generally, consumers add statements to give their side of a disputed account that is harming their credit score. There is no reason you cannot add a 100-word statement describing your car loan.
Kalvin F.
Beaverton, OR  |  May 30, 2012
I defaulted on a student loan and opted to repay with the loan rehabilitation option, as I was told it would lift the default completely from my credit report when the balance was paid. I didn't realize that the default would keep me from being able to apply/receive new federal student loans to continue my education, and thus called up the collection agency and payed off the loan balance in full (I was 5 months into the 9 month rehab period). How long will it take for the delinquency term to be removed from my credit report, and how will this whole thing affect future credit ventures. My current credit score is 650 and thus most private student loan lenders have declined my application (I've tried). Summary of my declined notice is as follows:
  • Serious delinquency
  • Length of time accounts have been established
  • Proportion of loan balances to loan amounts is too high
  • Number of inquiries on the consumer's credit file has adversely impacted the credit score
Bills.com
June 05, 2012
First, see the Bills.com resource Default on Federal Student Loan to learn more about your options if you face a default on your federal student loans in the future.

Second, contact the Federal Student Aid Ombudsman Group to learn how to show the Dept. of Education you are eligible for a federal student loan.
John B.
May 02, 2012
I was late for two months last year on my car payments and never got caught up. So I owed the bank two months worth. I payed the regular car payments throughout the year and finally payed all the late payments on march 30th. When will my credit show that it's been resolved? Its ally financial that I deal with.
Bills.com
May 02, 2012
It will likely take about a month or two for your credit report to reflect the updated information. The history of the running 60-day late payments will remain (accurately showing that you fell two months behind and stayed in that position for a number of months), but will show you as paid up-to-date as of March or April, depending when your payments are due.
John T.
February 23, 2012
3 questions: I have a house we lived in 25 years ago and it still shows on my credit report I sold the house but it is still on my credit report nothing neg just listed like an old credit cards I also notice that there is a business / chruch listed at my home address on my credit report This church was back in the 90's but I was not a business owner I have lots of old credit info 15 to 20 years old listed. nothing neg but still listed. should this not be cleaned up?
Bills.com
February 24, 2012
Positive and accurate information can, and should, remain remain on a person's credit report. Dispute the church- and business-related information that has no connection to you.
D D.
Ham Lake, MN  |  February 09, 2012
I co-signed for my son's student loans. They went into claim status, but have now been resolved by him. How do I get them off my credit report so I can co-sign for other children as I am being denied? Can I write to the 3 credit reporting bureaus and demand they be taken off the reports?
Bills.com
February 09, 2012
The derogatory items will remain on your credit report for the 7 1/2 year period, as required by law. If the items were reported in error, then you can dispute them.

If you are a strong enough borrower, then perhaps you can convince the bank to let you be a co-borrower, and have the payments taken out of your account automatically.
Becca P.
Durango, CO  |  January 11, 2012
I had a student loan that was paid off in 2007. It continues to show up on my credit report and I never really gave it a second thought until now. Was is supposed to be removed after my last payment? It looks as if it is still showing up as a debt that I owe?
Bills.com
January 11, 2012
Is the account history positive or negative? If the account history is contains negative entries, this is considered a derogatory account, and it will be removed from your credit report 7½ years after the date of first delinquency.

If the account is positive, then it can remain on your credit report forever. That is a good thing, because it shows future creditors you have a history of repaying your loans, and are therefore a good risk.
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Becca P.
Durango, CO  |  January 12, 2012
Thank you for the quick reply. The account is positive, so I am glad it was worry for nothing!
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Angela J.
Phelan, CA  |  January 05, 2014
To add to her question I have the same problem, it is positive buy it still shows that i owe a balance which is hurting me because of the debt to income ratio many creditors use. I paid the two accounts in full and it is a positive credit history but it is still hurting my credit what would you recommend me to do? I have already asked the company to correct it but they have not (that was about 10 months ago) thanks
Bills.com
January 06, 2014
Follow the instructions we provide in the Bills.com article 5 Steps to Take to Remove False Information From Your Credit Report. Keep in mind three consumer credit reporting agencies publish information that goes into credit scores, so you may have to repeat these steps for each publishing the bogus information.
Mikki P.
Philadelphia City, PA  |  November 04, 2011
I have a two part question. I just recently consolidated my student loans, a Mortgage lender told me I could provide proof of this and get my credit report updated instead of waiting for the lenders to report it. Is this true? Also, what about when there's inaccurate info? I was told that if there is more than a 50 point difference between one credit score and the other two, there's probably something wrong. Experian has all wrong info, and none of my new current accounts. I know I can dispute inaccurate info, but how do I get them to add info? This is costing me an opportunity to purchase a home.. Please advise?
Bills.com
November 04, 2011
A 50-point discrepancy in credit scores is not surprising, nor is it evidence of errors. What you are alluding to is called a rapid rescore. I recommend a rapid rescore in the circumstances you described.
Tannisha B.
Spartanburg, SC  |  May 27, 2011
I have an auto loan that i have had since 2007, I was deliquent on this account once in 2009 and once in 2010, so it is reported as a negative item on my credit report. I have been making on time and double payments for over a year now. What I would like to know is will this account ever go back showing as a positive account
Bills.com
May 27, 2011
Under the FCRA, the Fair Credit Reporting Act, derogatory marks are removed 7 years after their occurrence. In this case, they will be removed in 2016 and 2017.
Jade T.
North Highlands, CA  |  April 23, 2011
We recently tried to obtain a loan for our new vehicle we were GOING to get. However, we just found out that we cannot since our present finance company has NEVER reported this positive feedback (nor any negative or that we even HAVE a loan out for 36k) we have only 6.5k left and because of their them not reporting that we even have a loan or a CAR for that matter. When I spoke to the representative of our Credit Union he recommended that we get a lawyer do to the fact that we have been paying so much for the vehicle and the loan of such a large amount was NEVER reported on. What can we do?
Bills.com
April 25, 2011
Nothing. Well, nothing essentially. You can ask all three consumer credit reporting agencies to add a notation to your account indicating you made on-time payments for x months on a car loan. However, that will not be included in your credit score.

Under the FCRA, the Fair Credit Reporting Act, creditors are required to report accurate information, but are not required to report anything if they choose not to. For example, if you lend a relative $100, which they promise to repay in 30 days, you do not report that to Equifax, Experian, or TransUnion. You may say, "Well, that's different." No, it is not different — it is still a loan, a spoken contract, and a repayment. A car dealer that declines to report any loan information is, under the FCRA, the same as two relatives lending each other money.
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Bills.com
November 23, 2009
The creditor has an obligation to send the updated information about your account to the credit reporting agencies (commonly called "credit bureaus"). Wait about 60 days from the date of the pay-off. Then get a free copy of your credit report at each of the three major credit bureaus from AnnualCreditReport.com, review the reports, and dispute any errors you see. Go to the Bills.com debt self-help center to find a sample dispute-listing letter.
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Amar J.
January 17, 2012
Hi I worked for someone who sued me for damages. I was driving truck for this guy and got in an accident. According to Canadian labour standards an employer can't do that but he did. I had hired a student lawyer and because of his mistake and me not receiving the mail sent by court I couldn't appear on the date of settlement and lost the case. Employer reported it to credit bureau instead of calling me. It all happened in 2008. I found out that this is showing as a judgment against me in 2009. I paid the guy but this thing still shows on my account and keeps bringing my score down. I would like to know 1- is it lender/employers duty to report to credit bureau after the loan has been paid off? 2- what should I do now to fix this? It seems impossible to talk to someone in transunion or equifax to fix the issue. Please help. Thanks for help.
Bills.com
January 17, 2012
It is not enough to pay off a delinquent loan or credit line in order to have it erased from your credit report. Derogatory items remain on the credit report for 7 1/2 years from the time of first delinquency, unless you arrange for a pay for delete at the time paid it off.

I recommend that you read the Bills.com article improving your credit score.
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