Credit Reporting & The 7-Year Rule

The 7-Year Reporting Period is the time allowed for derogatory items to remain on your credit reports.

Why It Matters

Knowing what is in your credit report, and how long it can be there, is important because it helps you manage your credit, evaluate your credit obligations and improve your credit rating.

What You Need to Know 

The 7-year clock starts ticking 180 days from the date (month and year) of the first missed payment that led to charge off, collection, foreclosure or repossession. So, when you do the math, it is really 7 1/2 years (from the last missed payment) that you can expect the derogatory item to come off of your credit report. On a one-time billing type account (i.e. a medical bill, utility bill, etc.) the 7-year clock begins 7 years from the date the account became past due, even if the creditor does not send the account to collection in a timely manner, this rule still applies. In the case of late pays on accounts that do not result in a collection or charge-off, the 7-year clock begins running on the date that you were late. Regardless of how long a creditor waits to charge off, sell or transfer a debt, they must report the true and correct “delinquent or last missed payment” date (month and year) that preceded the creditor’s action. If they do not, they can be held liable, and they know it. The 7-year reporting period cannot be renewed. Exceptions to the 7-year rule are:

  • Bankruptcies – can remain on your record for up to 10 years from the date of discharge.
  • Federal Tax Liens – can remain for 7 years from the date paid; however, if not paid, they will remain for up to 10 years.
  • State Tax Liens – can remain for 7 years from the date paid. However, if they are unpaid, they can remain indefinitely; Information about a lawsuit or an unpaid judgment against you can be reported for 7 years from the date paid or until the statute of limitations runs out, whichever is longer.

Steps to Take

If you’d like to have old debt removed from your credit report, here are 3 steps you should take:

  • Order a copy of your credit report from each of the three bureaus, Equifax, Experian and TransUnion and check it old debts that you believe have passed the 7-year reporting period
  • Send certified letters to the credit bureau that is reporting the expired item and let them know that the 7-year reporting period has expired
  • Keep detailed records of all communication.

To learn more about your rights concerning credit, visit www.ftc.gov/credit, or simply Contact Us today to receive our expert advice!