Statute of Limitations on Credit Owed According to the Fair Credit Reporting Act

Prior to 1970, consumers were on their own with respect to the information provided to almost anyone by credit bureaus and credit reporting agencies. In 1970, Congress enacted the Fair Credit Reporting Act with the primary objective of protecting consumers against the release of inaccurate information by these agencies. Since that time, lawmakers have revisited and enhanced the FCRA, fine-tuning its fundamental principles to ensure even more protection for consumers with regard to the content and release of information in their credit report.

Negative Information

Making late payments, defaulting on a loan, repossessions and foreclosures are just a few types of negative information that stay in your credit file for seven years. Since lenders and employers routinely check credit reports, harmful details in them may keep you from negotiating a lower interest rate, buying a car or home and, in some cases getting a job.

Exceptions

There are exceptions to the seven-year rule. Bankruptcy stays on your report for 10 years. Criminal convictions stay on a credit report indefinitely. No time limitation applies to information reported in response to an application for a job with a salary of over $75,000 or when you apply for more that $150,000 in life insurance or credit. An unpaid judgment or lawsuit in your past can stay on your report longer than seven years if the statute of limitations associated with it exceeds that time frame.

Access

While the FCRA limits access to your credit report, if a credit reporting agency deems the requester has a legitimate business need, it releases the information. Besides applications for credit, these agencies release your credit history because of court orders, for account review by banks and other companies you do business with, for professional licensing requests and for child support payment determinations. When investigating terrorism or counterintelligence, law enforcement personnel may secretly access your credit report. In the case of employment, including hiring, promotion and retention, a prospective or current employer may request your credit report if given your permission to do so.

Protect Your Report

Protect your credit report by requesting a free copy every year. Because each of the three major credit reporting agencies may publish different information, get your report from all of them. Inspect the reports for errors. If you find mistakes, take steps to correct the inaccuracy. Since Equifax, Experian and TransUnion have different procedures for handling challenges to entries on a credit report, contact each one to determine what steps you should take to correct the errors. For a nominal fee you can get a copy of your credit score as well. As with the credit report itself, each credit reporting agency's score may differ; invest in one from each agency. Although the hit on your credit score from pre-screening queries is minimal, eliminate these queries altogether by opting out of the practice through a verbal request. Make the opt-out permanent by sending a letter detailing your request to the three national credit reporting agencies. Protect yourself even further by filing a formal request with each credit reporting agency asking them to withhold the last five digits of your Social Security number when supplying your credit report.