Legal language is tedious, and a lot of people don’t really bother reading it because it really is so lengthy. But there are ways to get around it — you just need to get the highlights and work from there. If you don’t know the laws, you can’t fight back. If you can’t fight back, then the collection agencies win. If you’re dealing with a debt collector, you need to realize that they couldn’t care less about your problems. A lot of people try to reason with collection agencies like they actually care about what’s happening in your life. All they care about is whether or not they’re going to get paid. They know the laws on their side, but it’s time for you to know the laws on your side as well.
The Fair Credit Reporting Act has been around for a while, and it gives you the power to push away inaccurate credit reporting. No one can argue with federal law except in some rare cases where state law actually protects you better than the federal law.
This is actually going to be a little longer so that we cover all of the important points for you.
One of the top sections that you want to pay attention to when it comes to the FCRA is Section 1681c. These are the requirements that relate directly to information contained in consumer reports (aka your credit report).
Information excluded from consumer reports, exempted cases, running of reporting period (how long it can be on your credit report), what information IS required to be disclosed, the indications of a closed account by consumer, the indication of dispute by consumer, and anything else that needs to be excluded.
Debts that were included in a bankruptcy can only be on your credit report for a maximum of ten years — though it is often 7 years from the date of the entry of the order for relief. Sometimes it is the date that the bankruptcy was charged. Keep both dates in mind before you file any type of letter asking for the information to be removed.
Civil suits, judgments, and records of arrest last for seven years or until the statute of limitations regarding these events has expired.
Paid tax liens last for seven years as well.
Accounts placed for collection or charged off last for seven years.
Now, we’re going to break away from listing things to remind you that collection agencies are tricky. They assume that you don’t read the law, so you won’t have any clue of what’s going on. So they might tell you that they can extend the reporting time of 7 years. That’s absolutely false, and they know it. But if you don’t know it, you’ll be living in fear for no reason at all. The reporting time is determined by federal law and it lets you know exactly how long an item is to stay on your credit report. You might not realize this, but it is 7 years from the date it was charged off or placed into collections. The date of last payment or the date the item was sold to a 3rd party debt collector does not matter.
If you have a really old debt that is still inside the statute of limitations for collecting a debt, you are better off settling and getting a better credit rating. Make sure that if they will not delete the item off your report that you get “paid in full” rather than “settled for less than full amount”. It does make a difference in how your score is calculated at the end of the day.
The better situation would be where the collection agency will actually remove the tradeline from your account in exchange for payment. That’s going to give you the best way to clean up your credit since the information won’t even be there in the first place.
Now, it’s also important to make sure that you watch out for closed accounts. A lot of people think that you should close accounts that you no longer use. If these accounts are old, they’re going to absolutely damage your credit score. Why? Because you’re cutting off history that raises your score. Lenders want to make sure that you have used credit for a long time and you have a history of paying off your debts. Once you close an account, you lose all of that history with it. Good information lasts for 10 years or better, so you need to make sure that you wrack up as much good information as possible. If you feel that you can’t handle credit, then you might want to make sure that you actually take steps to correct your spending.
Credit is just a tool — it’s what you make of your credit that truly makes all of the difference! So make sure that you read up on the FCRA for yourself and then take action — that’s the best way to go!