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Major Credit Bureaus - Learn the Cold Hard Facts about Reporting
Most people feel like this is an undeserved prison sentence they have been given. During this time they can not move into a house or purchase a new car at a reasonable interest rate.
Why is it seven years?
Is one bad decision deserving of a seven year punishment? Why do you have to live with the high cost of bad credit? The choice probably came down to paying a bill or providing for your family if you want to call that a choice.
Is there something magical or statistically relevant about seven years that will make somebody all of a sudden credit worthy again? Did financial experts perform complicated tests and discover that a person needs seven years for credit rehabilitation?
No, there is no scientific reasoning behind the seven year mark. It is a completely random time limit.
The Fair Credit Reporting Act was passed by congress in 1970. This piece of legislation established the reporting time limit. Before the Fair Credit Reporting Act a negative notation stayed on your credit report forever.
Congress placed this time limit on the credit bureaus. Do not be mistaken and believe that a negative notation must remain on your credit report for seven years. That is the maximum not the minimum.
Congress made it illegal for credit bureaus to report a bad credit mark for longer than seven years. Frequently people have successfully had a negative mark removed long before the seven year time limit.
Reporting to the credit bureaus is completely voluntary. Creditors and collection agencies are not required to report any notations or accounts to the bureaus. As well they often remove notations and accounts long before seven years.
Often creditors and collection agencies just need some encouragement from a good credit repair attorney or a compelling credit dispute letter. In addition, the credit bureaus themselves perform a form of credit repair at the seven year point.
In a utopian society there would be no time limits on credit reporting. Instead, marks would remain as long as they truly reflected the applicant. Information found on a credit report would only provide accurate marks about the applicants' credit worthiness. Instead of being an excuse for a creditor to give you unreasonable interest rate or down payment.
However, the sad truth is that for now we are stuck living with the seven year limit. However, why should we wait to repair questionable credit until some arbitrary limitation has elapsed? Why shouldn't we delete questionable and misleading information immediately so that we can become creditworthy again?
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