BILL'S ANSWER
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 7.5 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 7.5 years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to the seven-year rule. However, if the debt is a tax lien, that can appear for seven years from the date of payment. A bankruptcy will appear for ten years from the date of the final order. Delinquent federal student loans can be reported indefinitely, i.e., for as long as they are delinquent.
A R9 appears on your credit report whenever an account has been “Charged-off” — which is an accounting term used by creditors, meaning that a creditor has transferred an account from its “accounts receivable” books to its “bad debt” ledger; credit issuers are required to do this by the federal Office of the Comptroller of Currency, in an attempt to prevent banks from inflating future earnings statements with old and defaulted accounts.
For the consumer, the only real consequence of an account charging off is that the account will report as a negative item (R9) on the consumers’ credit reports. Only time — specifically, 7 years of it — will remove a R9/charge-off from a credit report, but the $0 balance showing on your report means they are paid off, which is much better for your credit than if you still had an outstanding balance.
Be sure to save those settlement letters from those companies, because even though R9's are to be automatically dropped after 7 years, the credit bureaus sometimes make mistakes. And if they do, those settlement letters will be extremely helpful in getting that straightened out to your benefit.
I hope this information helps you Find. Learn & Save.
Best,
Bill
June 08, 2009
June 08, 2009
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