A common concern for people is "how long will a negative mark stay on my credit report?" The answer is a maximum of seven years. A bankruptcy or judgment can remain for 10 years depending upon the statute of limitations in your state.
Most people feel like this is an undeserved prison sentence they have been given. During this time they can not move into a house or purchase a new car at a reasonable interest rate.
Why seven years?
Should a single slip-up deserve a seven year punishment? Should you have to live with a bad credit report for being out of work for a few months, even when we caught up on our bills soon after?
Is there something magical or statistically relevant about seven years that will make somebody all of a sudden credit worthy again? Did financial experts perform complicated tests and discover that a person needs seven years for credit rehabilitation?
Of course not, there is no good reason whatsoever for the seven year reporting law. It is a completely arbitrary time limit.
The Fair Credit Reporting Act was passed by congress in 1970. This piece of legislation established the reporting time limit. Before the Fair Credit Reporting Act a negative notation stayed on your credit report forever.
Congress placed this time limit on the credit bureaus. Do not be mistaken and believe that a negative notation must remain on your credit report for seven years. That is the maximum not the minimum.
Congress made it illegal for credit bureaus to report a bad credit mark for longer than seven years. Frequently people have successfully had a negative mark removed long before the seven year time limit.
Creditors and collection agencies are not required to report a listing. This is completely voluntary on behalf of the creditors and collection agencies. Furthermore creditors and collection agencies have often removed negative marks before the seven year limit.
Creditors and collection agencies usually just need a little encouragement from a compelling dispute letter or a good credit repair attorney. Plus, the credit bureaus perform credit repair on your report at the seven year mark.
In a utopian society there would be no time limits on credit reporting. Instead, marks would remain as long as they truly reflected the applicant. Information found on a credit report would only provide accurate marks about the applicants' credit worthiness. Instead of being an excuse for a creditor to give you unreasonable interest rate or down payment.
The point is since we don't live in that world, why should we wait to repair our credit? Why shouldn't we take steps today to erase questionable and misleading information from our credit report? This way we don't have to pay the high cost of bad credit longer than we have to?
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