How Long Can Bad Credit Remain on Your Credit Report?

This is a question that we get asked often and, in our credit-based society, it is a very important one.  The Fair Credit Reporting Act (FCRA) [PDF] is the federal law that controls everything that is allowed to be on an individual’s credit report.

If anyone even has this question on their mind, the first thing he or she should do is to get all of their free credit reports immediately (in WRITING ONLY and NOT on-line!)  and review them very carefully.

As a general rule, bad credit defined as late payments, collections, etc. can remain on a person’s credit report for a period of seven years. That seven-year period begins as of the date of last activity, which is either when the account has been paid in full or the creditor/collector has written the debt off as a charge-off.

We have written previously on these topics and explained in detail how a person can put incorrect information into dispute under the Fair Credit Reporting Act.

• Fair Credit Reporting Act
• Disputing Incorrect Information on a Credit Report
• Equifax Ordered to Pay 18.6 million after failing ot fix women's credit report
• Credit Report Disputes - Furnisher's Must Investigate

An interesting question and the purpose of this particular blog is to answer the question, why is it seven years?

That was the question that Credit.com’s Gerri Detweiler looked into, only to find that most people in the consumer credit business have no idea why the Fair Credit Reporting Act specifies a maximum of seven years. After all, why not five years or ten years — or why there aren’t a range of dates for different transgressions?

One person from Experian, one of the three major credit bureaus, suggested that the source might even be Biblical, pointing out that Chapter 15 of Deuteronomy mandates forgiveness of debts every seven years.  See our related topic on the Bible and debt forgiveness.

But she eventually found a Congressional staffer who was able to dig up some info on how the seven-year figure worked its way into the federal legislation. While lawmakers were negotiating the FCRA, the House and Senate had very different notions about how to specify the amount of time debt could remain on your report. The House wanted a fixed term — three, seven, and 14 years were options proposed — while the Senate proposed the more general “reasonable period of time.”

Consumer advocates argued that the Senate proposal was too ambiguous and suggested seven years, as it was an industry standard at the time.

There have been numerous legislative attempts to change or add nuance to the FCRA in recent years. Some lawmakers have proposed erasing medical debt from credit reports shortly after it’s paid off, while Congresswoman Maxine Waters of California recently introduced a bill that would limit the reporting window to four years for many types of consumer debt.

Our lawyers handle cases under the Fair Credit Reporting Act. If you have an issue with your credit reports with regard to something you think is incorrect or should not be there, please feel free to contact our office nearest to you for free consultation visit.