Credit Basics
Rebuild Your Credit
Rebuilding
Good Credit
If you’ve had credit problems
in the past, you probably feel frustrated and worried that your damaged
credit history will stay with you forever, or at least for a very long time.
In almost every case, however, there are strategies you can use to put your
credit back on track. If you actively work on improving your credit, you will
see results. It may not happen as quickly as you hope – or it may happen more
quickly than you expected. Some consumers are able to buy a home in as little
as a year after bankruptcy, for example. It all depends on your situation and
whether you are willing to take the time and effort required. In this brochure,
you’ll find proven strategies for building better credit.
Start where you
are
Your first step is to get
a copy of your credit report, preferably from all three major credit
bureaus.You’ll find a good source for a three-bureau report at
www.ConsolidatedCredit.org
where you can get a copy of your report, along with credit scores,
from Experian, Equifax and Trans Union.With this information, you’ll
be able to create a game plan for improving your score.We also
recommend you read Make the Most of Your Credit Score, a free
publication from Consolidated Credit Counseling Services Inc.
How long can information
be reported?
The first thing most people with
bad credit want to know is,“how long can this information haunt me?” Under
the Federal Fair Credit Reporting Act, credit reporting agencies are not allowed
to report any information that is too old, incomplete, or wrong.
While positive or neutral information
can be reported indefinitely, negative information can only be reported for the
following length of time:
Bankruptcy Filings - Ten years
from date filed, not discharged. The three major credit bureaus, and many smaller
ones, have agreed voluntarily to remove Chapter 13 bankruptcies -- a bankruptcy
where debts are paid back over several years -- seven years from the date of filing.
If that doesn’t happen automatically you’ll have to ask.
Civil suits, civil judgments,
and records of arrest - No longer than seven years from the date of
entry, or the current governing statute of limitations, whichever is longer.
Paid tax liens - Seven
years from the date satisfied (paid).
Unpaid tax liens - Indefinite
until the lien is paid (see above).
Collection or charge-off accounts -
Seven years unless a US Government insured or guaranteed student loan, or
National Direct Student Loan (NDSL). If those types of student loans are in
default and you bring them current for an entire year, your previous late
payments will be deleted.
Any other adverse information
(including late payments) - Seven years. Adverse information is any data
that may cause an unfavorable result for the consumer, for example; being turned
down for credit, employment or insurance; or being charged a higher rate than
applied for in the case of credit or insurance.
