The Truth About Negative Items on Your Credit Report: Debunking Myths and Misinformation
In the vast and often confusing world of credit reports, there are numerous claims and misconceptions floating around. Two such claims are particularly misleading and harmful: those by Isabel Etkind and Robert Combs. It is important to separate fact from fiction and understand the actual guidelines set forth by the Fair Credit Reporting Act (FCRA).
Understanding Credit Reporting Time Periods
The FCRA clearly delineates the time periods during which different types of negative information can be maintained on your credit report. Understanding these periods is crucial for anyone looking to maintain or improve their credit score.
Charged Off Consumer Credit Accounts
The most significant period to know is for charged off consumer credit accounts. According to the FCRA, these derogatory data can remain on your report for a relatively long period: 7.5 years from the date of first delinquency. This means that after 7.5 years from the first missed payment, the charge-off will be removed. It is important to note that this period starts from the first delinquency, not the time the account was fully charged off.
Other Derogatory Data
Most other forms of derogatory data, such as late payments, collections, and public record items, can generally remain on your report for up to 7 years. However, there are some exceptions to this general rule:
Bankruptcies: Depending on the type, bankruptcies can remain on your report for 7 to 10 years. Specifically, chapter 7 bankruptcies last for 7 years, while chapter 13 bankruptcies can last up to 10 years. IRS Tax Debt: Tax debt remains on your credit report until it is satisfied by payment. If you cannot resolve the debt, it can become a long-term issue. Child Support: Child support obligations can remain on your credit report for 7 years after the last support payment is made.Disputing Derogatory Data
There are also claims made by so-called 'credit experts' like Robert Combs that they can remove derogatory data from your credit report. These claims are not only misleading but also fraudulent. The concept of removing derogatory data through legal or ethical means is often a scam. Here’s how it typically works:
The Dispute Process
These 'credit experts' typically charge a hefty fee for their services and then bombard the credit reporting agencies (CRA) with disputes. When a CRA receives a dispute, they notify the tradeline owner and provide them with 60 days to respond. During this period, the derogatory data can be suppressed on your report, which can give the illusion that the data has been cleared. However, when the tradeline owner verifies the information, the derogatory data is restored, and the credit reporting agency re-reports it.
The Reality of Credit Fraud
What is visible is the original derogatory data, while what is not visible is the money you paid to the fraudulent 'credit expert'. Furthermore, if the CRA determines that the disputes were frivolous, they may also penalize you under the Fair Credit Reporting Act (FCRA). Specifically, Section 617 of the FCRA allows CRAs to completely ignore any further disputes from individuals who have previously submitted frivolous disputes. This means you may face further penalties, referred to as a 'double FITA' (Findings of Invalid Transmitted/Inserted Data). In essence, not only do you lose money, but you may also face additional penalties and complicate your credit situation.
Conclusion
Understanding the actual time periods for credit reporting and avoiding the pitfalls of false promises is critical. Always verify information with official sources like the FCRA or the Consumer Financial Protection Bureau (CFPB). Be wary of any claims that do not adhere to these time periods and seek assistance only from reputable sources. By doing your research and staying informed, you can protect your credit report and make informed decisions to improve your financial health.