Just because an old debt is outside the statute of limitations doesn't mean that it can't show up on your credit report. Statute of limitations laws are different from credit reporting time limits, so it pays know your debts' original delinquency dates.
Statute of Limitations
Every state has its own "statute of limitations" laws for debt and judgment collection. Creditors have a limited amount of time to file a lawsuit against you to collect a debt. If the creditor tries to sue you after the statute of limitations expires, you can ask the judge to dismiss the case. Most states grant creditors a second, longer and often renewable statute of limitations for collecting a judgment. If a creditor successfully sues you, it may have decades to pursue the debt.
Credit Reporting Time Limits
The federal Fair Credit Reporting Act (FCRA) limits how long derogatory (negative) information can stay on your credit report. Most types of bad credit information, such as late payments or charged-off accounts, can only stay on your report for seven years. Bankruptcies can stay on your report for up to 10 years, and unpaid judgments can stay on your report for seven years or until the statute of limitations on judgment collections in your state expires.
Credit Reporting vs. Statute of Limitations
Credit reporting time limits and statutes of limitations laws are two different things. For example, if your creditors miss your state's four-year statute of limitations on taking you to court over a debt, you're probably safe from a lawsuit. However, your charged-off account stays on your credit report for three more years. This can also work in reverse: If your state's statute of limitations on debt is over seven years, the debt may no longer be on your credit report, but you creditor can still sue you. The only situation in which a state's statute of limitations affects credit reporting is when a court judgment remains unpaid. In such cases, the credit bureau can continue reporting the judgment as long as its statute of limitations remains in effect.
Disputing Old Debt
If derogatory information continues to appear on your credit report after the credit reporting time limits set by the FCRA, ask the credit bureau or bureaus that compiled your report to remove the outdated information. You can do this online through the credit bureau's website, or by sending the credit bureau a letter listing the outdated accounts.
Zombie Debt
If you get a letter from a collection agency about a very old debt, be cautious. Some collection agencies specialize in buying up old debt for a few cents on the dollar, then trying to collect it. Some consumer advocates call this sort of debt "zombie debt" because these debt buyers keep it "alive" long after the expiration of both the statute of limitations and the credit reporting time limits. Unfortunately, you can restart both if you make a payment, or a promise of payment, on these accounts. Some of these debt buyers even engage in an illegal tactic known as "re-aging" a debt by reporting the debt to credit bureaus as a new account. When you hear from a zombie debt buyer, send it a letter stating that the debt is outside the statute of limitations, and that they are to cease all contact with you. Then check your credit report: If you see the debt listed or re-listed, dispute it with the credit bureau.
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