ESPAÑOL   |   ENGLISH

Do I need help?

Debt Management

Credit Counseling

Credit Basics

 

When does the 7-year period start?

If you have collection or charged off accounts listed on your credit report, you'll want to read this section carefully. It may be confusing at first, but because mistakes are often made, you'll want to make sure you understand it.

For collection or charged-off accounts, the 7-year clock starts ticking 6 months from the date you first fell behind leading up to the collection or charge-off. It does not start when the account was placed for collection or to the date of last activity.

For example: Let's say your credit card payment was due on June 1, 1998. You lost your job and couldn't make your required payments. In November of 1998, the issuer charged off your account (wrote it off as a bad debt). In January 1999, it was placed with a collection agency. By law, the collection agency is supposed to tell the credit bureau when it first reports the collection account that the original date of delinquency was June 1998 and that should start the 7 year reporting period.

Warning: Beware of collection agencies that tell you they have ways of reporting the collection account "forever" to the credit bureaus if you don't pay. That's simply not true.

What do I do now?

Once you have your credit report and understand how long information can be reported, you're ready to create a strategy for building better credit.

Step #1: Fix mistakes.

It's not unusual to find wrong or outdated accounts. You may want to check for the following items:

Accounts that don't belong to you. Keep in mind, though, that if you cosigned for an account, it will likely be reported on your credit report and treated as your own. If you were only an authorized user on an account that fell behind, the creditor may be willing to remove it from your credit report since you weren't legally responsible for the bills.

Incorrect balances. While you can expect it to take 30 - 60 days for information about your loan balances to be updated, you shouldn't see completely wrong information. For example, an account that was discharged in bankruptcy or settled through a collection agency should show a zero balance.

Duplicate accounts. If an account was turned over to multiple collection agencies, only the most recent collection agency account should appear. Otherwise, it can look as if you have more accounts in collections than you actually do.

Old accounts. You may find old accounts you don't use anymore still listed. Even if an account is paid off, it may remain for the legal time limit. Fair Isaac Company, creator of the popular FICO credit scores, recommends that you don't close old accounts because doing so may hurt your score and won't help improve it.

To dispute wrong information, you can contact the credit reporting agency that is listing the wrong information, the credit grantor that is reporting it, or both.The advantage of going to the credit reporting agency is that they are better equipped to handle disputes. If they cannot promptly confirm the information on your report with the source, by law it must be removed.The disadvantage is that the major credit bureaus don't share information with each other, so you'll have to check all three credit reports and dispute mistakes through each one that has the wrong information.

The advantage of disputing mistakes directly with the credit grantor is that the lender must supply any correction to all the credit bureaus that have the wrong information.The disadvantage is that creditors aren't always set up to handle disputes and you may find it harder to get your problem resolved promptly.

Whichever approach you choose, put your dispute in writing, type it if your handwriting isn't clear, and make it brief yet describe the problem clearly. If you have any documentation to prove your side of the story, include it.The credit bureau or credit grantor must generally get back to you within 30 days to tell you the results of their investigation. Keep copies of all the letters you send and get back.


 


«  1   |  2  |  3  |  4   »