When Will Unpaid Debts Leave Your Credit Report?

Your credit report serves as a thorough record of your financial past. Prior creditors you held accounts with, how much you currently owe and any balance you previously left unpaid all show up in your credit report for future lenders to see and all affect your credit scores. Unpaid debts are particularly detrimental to your credit but do not remain on file with the credit bureaus forever.

Seven-Year Standard

The reporting period for debts represents the amount of time the credit bureaus can leave a given entry within your credit report. The standard reporting period for most varieties of unpaid debt as stated by the Fair Credit Reporting Act (FCRA) is seven years. For example, if you default on a credit card, the credit card account and its subsequent collection account appear on your credit report for seven years. After seven years pass, the credit bureaus remove the credit card account and any collection accounts connected to the original debt from your credit record. Once removed, these entries no longer negatively affect your credit rating.

Exceptions

Some unpaid debts can legally show up on your credit report for longer than seven years. One example of this involves bankruptcy petitions. If your unpaid debts were discharged through a bankruptcy, an entry noting the bankruptcy can appear on your credit file for up to 10 years. Judgments are yet another example. Unlike other reporting periods, the length of time a judgment appears on your credit report depends on how your state governs judgment enforcement. California, for example, dictates that money judgments from creditors are enforceable for 10 years. Thus, your credit report would reflect a California judgment for 10 years.

Calculating Reporting Periods

The standard seven-year reporting period does not begin on the day your account first becomes delinquent. Rather, the FCRA notes that the reporting period begins 180 days from your most recent payment. This date is often known as the "date of last activity."

If the unpaid debt is a credit card account, the date of last activity is usually the day your creditor charged off the account. Credit card companies typically write off defaulted accounts after 180 days. The company then notes the charge-off date on your credit report.

Removal Through Dispute

The credit bureaus and your creditors alike have the ability to modify your credit records. If an unpaid debt that is not yours shows up within your credit history, the FCRA gives you the right to contest the item's validity with the credit bureaus. You also have the right to file a dispute with the creditor that initially reported the incorrect information.

Even if the unpaid debt is legitimately yours, you can dispute any aspect of the debt's tradeline that is incorrect. If, for example, your creditor made an error when reporting the amount you owe or the date your account was opened or closed, you can demand that the credit bureaus investigate and either correct the error or remove the entire tradeline from your credit report.