Getting Delinquent Accounts Off Credit Reports

There is no reliable way to remove accurate credit information from a credit report. Despite the claims of many organizations offering “credit repair,” a derogatory listing that represents your payment history accurately to a creditor will probably stay on your credit report for seven years. Why? Let us start by looking at the rules for credit reports.

Federal Credit Report Rules

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. This law is known as 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 7½ years. The clock starts approximately 180 days after the date of first delinquency on the account. To learn when an account will be removed by the credit reporting agencies (TransUnion, Equifax, and Experian and others), add 7½ years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to this rule. The seven-year rule does not apply to all debts, however. Here are four exceptions:

• A tax lien can appear for seven years from the date of payment.
• A bankruptcy will appear for 10 years from the date of the final order.
• Federal student loans can be reported for as long as they are delinquent. (Private student loans follow the 7½-year rule.)
• A civil judgment can appear for seven years, or the length of a judgment’s statute of limitations in the consumer’s state, whichever is longer.

Learn the lifespan of a judgment in your state at the Bills.com Statute of Limitations Laws by State page.

The start of the seven-year 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.

Clearing Items From Your Credit Report

If you have an account on your credit profile which is reporting as delinquent or in collections, you may not be able to remove the account from your credit report, but you should at least be able to mitigate the negative impact of the derogatory listing on your credit score.

First, you may want to pay off any delinquent accounts which are appearing on your credit report. You will likely have difficulty clearing up your credit rating if you leave old collection accounts unpaid and unresolved. You do not necessarily need to pay the full balance of the debt; many creditors will accept a settlement of significantly less than the full balance owed on delinquent accounts in order to resolve the debt. If you contact your creditors, or the collection agencies representing them, you may be able to negotiate settlements for 50% or less of the current balance owed. You may also wish to contact a professional debt negotiation firm for assistance in resolving your delinquent accounts; for more information on the options available to you in resolving these old debts, I encourage you to visit the Bills.com Debt Help page. Also, if you enter your contact information in the Bills.com Savings Center, we can put you in contact with a pre-screened debt resolution firm which may be able to assist you in paying off your delinquent accounts.

In addition, if you have any questionable items on your credit report which you think are reporting inaccurately, disputing the items is the first step in having them removed from your report. Generally speaking, I encourage consumers to carefully review their credit reports from each of the three major credit reporting bureaus (Equifax, Experian, and TransUnion) at least once per year to make sure that all of the information appearing on the reports is accurate. A free copy of your credit report can be obtained at AnnualCreditReport.com. Credit reports are notoriously inaccurate, and close scrutiny is required on your part to make sure that your credit report is current and accurate. See the Federal Trade Commission document FTC Facts for Consumers: How to Dispute Credit Report Errors for more information.

Since it is somewhat unlikely that you will be able to have accurate credit information removed from your credit reports, you may want to focus instead on how you can improve your credit rating going forward. The first step to rebuilding your credit rating is to establish new positive trade lines to counterbalance the negative impact of these old delinquent accounts. As mentioned above, you also need to carefully review your credit reports on a regular basis to make sure that all information appearing on your reports is accurate and up to date. You also need to avoid overusing credit, as having too much debt can negatively influence your credit score; a good rule to follow is to carry balances equaling no more than 25% of your total available credit lines. To learn more about credit, credit reports, and credit scoring, I encourage you to visit the Bills.com Credit Help page.

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

Best,

Bill

Bills.com