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Report Paid Debt on Credit Report

How can I be sure a creditor reports a paid debt on my credit report?

What do I ask for when a debt is paid off completely. A letter from the company, or to make sure that this reflects on my credit report??

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Updated: Sep 23, 2014

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Highlights

  • The FCRA controls creditors and credit bureaus on what they can report.
  • Creditors are obligated to report accurate information.
  • Monitor your credit report and score.

The Fair Credit Reporting Act (FCRA), a federal law, requires consumer credit reporting companies to report accurate information. Under the FCRA, the information provider (i.e., the person, company, or organization that provides information about you to a consumer reporting agency) is responsible for reporting accurate information to the credit bureaus, and for correcting inaccurate or incomplete information in a consumer’s credit report.

Therefore, you should be able to do nothing and once your delinquent debt is paid this should appear on your credit report automatically.

Unsure how to handle your debt? Let the Bills.com Debt Coach tool give you a customized report on your debt resolution options. It’s free!

There is common misinformation or misunderstanding how paid debts can appear on a credit report.

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.

Over time, resolving the outstanding balance appearing on your credit report should have a positive impact on your credit rating. The past delinquency will not be removed from your credit report, but it should change the listing to reflect a $0 balance on this debt. While the past delinquency will continue to negatively impact your credit, the impact should be less and it will reduce your "debt to available credit ratio," which should also have a positive impact on your credit rating.

Take the time to learn how to improve your credit score. Don’t take on too much debt and make all your payments on time.

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

Best,

Bill

Bills.com