You have a credit report if you have a credit card or if you have taken a loan
. This credit report contains information about you, your identity, your official and home address, and other relevant information like your bill paying habits, and your credit history. This information is collected by credit reporting agencies (CRAs).These agencies make a report of the information thus collected. Creditors access this information to decide whether they should extend credit to you.
The Fair Credit reporting Act (The FCRA) enforced by the Federal Trade Commission (The FTC) regulates credit reporting agencies (CRAs).
There are three national CRAs in America - Experian, Equifax and Trans Union. Your information may be available with one or two or all three agencies.
There are rules regarding how long the information collected by the CRAs remains in the credit report. Inquiries about your credit stays on the report for two years while late payments, defaults appear in the report for seven years from the month the late payment was made. Collection accounts, judgments and charge offs stay on your report for seven years. Charge offs are pasted from the date of delinquency plus 180 days. Judgments are taken into account as seven years or until the statute of limitations expires or whichever is longer. Federal tax liens and federal student loans have no time limit for carrying them in the credit report. Both chapter 7 and 13 bankruptcies stay a minimum of seven years in the credit report. While the maximum time limit in chapter 13 bankruptcy is thirteen years, in chapter 7 bankruptcy it is ten years.
It is important to understand the seven year limit carefully. The standard method of calculating this period is from the date the event last took place or from the date the last payment was made. However, for six years you don't pay anything and suddenly you make a payment to the company it could reset the entire payment clock. The debt might start having the seven year period from the start. If you left it as it is it would have rolled off in another year. But if you pay after six years you might confront another seven years of negative reporting.
Such issues can be sorted out by contacting the creditors and work out a deal with them in writing not to report the debt in exchange for payment. This would clear your past debt and make your credit report clean.