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Types of Negative Credit

Each bureau has slightly different indicators and understanding them is extremely important.  The listing is negative if it contains one or more of these indicators.  If the listing contains none of these indicators, then the listing is positive.

Experian Credit Report
• Any item marked with an asterisk (*) 
• Any inquiry

Trans Union Credit Report
  • Any item rated higher than I1, M1, or R1 
  • Any item listed as repossession, foreclosure, profit and loss write-off charge-off, paid profit and loss write-off, paid charge off, settled, settled for less than full balance, or included in bankruptcy 
  • Any collection amount, whether paid or not 
  • Any court account, including a lien, judgment, bankruptcy chapters 11, 7, or 13, divorce, satisfied lien, or satisfied judgment 
  • Any item showing one or more thirty, sixty, or ninety-day late payments in the column to the far right 
  • Any inquiry

Equifax Credit Report

  • Any item rated higher than I1, M1, or R1 (such as R2 or I9) 
  • Any item listed as repossession, foreclosure, profit and loss write-off charge-off, paid profit and loss write-off, paid charge off, settled, settled for less than full balance, or included in bankruptcy  -Any collection amount, whether paid or not 
  • Any court account, including a lien, judgment, bankruptcy chapters 11, 7, or 13, divorce, satisfied lien, or satisfied judgment 
  • Any item showing one or more thirty, sixty, or ninety-day late
 

While the personal information in your credit reports is self explanatory, the public records and credit history is not.  To familiarize yourself with what is in your credit reports, review the items listed above and read the following description to see how this listing affects you.

One is current and positive, and nine is delinquent or negative.  As you move from one through nine, the rating goes down.  As I discussed above, the range is one through nine with nine being the worst.

Furnishers or Information
Furnishers of information are also governed by the Federal Fair Credit Reporting Act,
FCRA.  Anyone who reports information to a CREDIT REPORTING AGENCY- CRA must follow the Act.  Specifically they must be fair and report truthful accurate information. 

The section of the Act that applies to furnishers of information is -  623.  Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C. § 1681s-2] Duty of furnishers of information to provide accurate information.

(1) Prohibition. Reporting information with actual knowledge of errors.  A person shall not furnish any information relating to a consumer to any consumer-reporting agency if the person knows or consciously avoids knowing that the information is inaccurate.

This section means that the furnisher of information cannot knowingly report false or inaccurate information.  To do so is a violation of the Act.

(B) Reporting information after notice and confirmation of errors.  A person shall not furnish information relating to a consumer to any consumer reporting agency if

(i) The person has been notified by the consumer, at the address specified by the person for such notices, that specific information is inaccurate; and

(ii) The information is, in fact, inaccurate.

This section means that the furnisher of information must cease reporting information that has been confirmed as inaccurate in some way.  To continue reporting the information after notice from the consumer would be a violation of the Act. 

Furnishers of information often violate this portion of the Act.  A good example of common violations is a collection agency continuing to report an account as collection or charge off when in fact it has been paid or settled, or is in dispute, or a creditor refusing to report a credit limit or closed status.

(2) Duty to correct and update information.  A person who;

(A) Regularly and in the ordinary course of business furnishes information to one or more consumer reporting agencies about the person's transactions or experiences with any consumer; and

(B) Has furnished to a consumer reporting agency information that the person determines is not complete or accurate, shall promptly notify the consumer reporting agency of that determination and provide to the agency any corrections to that information, or any additional information, that is necessary to make the information provided by the person to the agency complete and accurate, and shall not thereafter furnish to the agency any of the information that remains not complete or accurate.

(3) Duty to provide notice of dispute.  If the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.

(4) Duty to provide notice of closed accounts.  A person who regularly and in the ordinary course of business furnishes information to a consumer reporting agency regarding a consumer who has a credit account with that person shall notify the agency of the voluntary closure of the account by the consumer, in information regularly furnished for the period in which the account is closed.

(5) Duty to provide notice of delinquency of accounts.  A person who furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or subjected to any similar action shall, not later than 90 days after furnishing the information, notify the agency of the month and year of the commencement of the delinquency that immediately preceded the action.

(b) Duties of furnishers of information upon notice of dispute.

(1) In general.  After receiving notice pursuant to section 611(a)(2) [§ 1681i] of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer-reporting agency, the person shall

(A) Conduct an investigation with respect to the disputed information;

(B) Review all relevant information provided by the consumer-reporting agency pursuant to section 611(a)(2) [§ 1681i];

(C) Report the results of the investigation to the consumer reporting agency; and

(D) If the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis.

Section 623 of the FCRA gives a consumer quite a bit of protection in dealing with those who regularly report information to a CRA.  Surprising enough however, many furnishers of information are not even aware of their responsibilities under this Act.  It may take you telling them to correct an issue that otherwise cannot be resolved with the CRA.  Normally you would first dispute items with a CRA but inquiries are best argued with the source, in my opinion.  Contacting a furnisher of information may sometimes be the only way to resolve some items.

STATUTE OF LIMITATION (SOL) CREDIT

This is one of the most confusing topics for consumers.  In general, negative credit remains for 7 years from the first serious delinquency or date that led to charge off- not last activity date. The Fair Credit Reporting Act (FCRA) determines how long bad credit can remain. FCRA link can be found here http://www.ftc.gov/os/statutes/fcra.htm .

Many creditors and even the credit bureaus are confused by the 7-year rule and understand the period to be 7 years from last activity.  Trying to explain the difference between last activity and first serious delinquency, which leads to charge-off, is difficult.

Ultimately the creditor is liable for reporting the information to the CRA (Credit Reporting Agency).  If you are disputing an account and the credit bureau is truly investigating the item, then you may need to turn your efforts to the creditor for final resolve.

Paying an old debt does not extend the time it can be reported to a CRA.  Many times you will find that a creditor or collection agency has reported a debt for seven years from the time you paid it off.  This is a common problem for consumers.  If a collection agency has bought your old debt, be sure to check the date they are using to report it. 

Consumers have spent countless hours arguing a rating with a creditor or credit bureau only to get nowhere.  Sometimes you will have to be very aggressive with a creditor or collection agency to get the item resolved. 

A collection agency may also use your credit report against you by threatening to post the negative debt to your credit.  Just remember the time allowed to report as stated above and stand up for yourself.  Purposely inserting an expired debt by a CA (collection agency) is a violation of the Fair Debt Collection Practices Act- FDCPA, and falls under "inaccurate" in the FCRA. 

Debts Charged Off Prior to 1997
The old version of the FCRA was very ambiguous, which means even though it was not specific for saying exactly when a date commenced, it has never been legal nor acceptable to charge off a debt, and then report it for an additional seven years, simply because a payment was made.

Repaying a debt cannot restart the clock on reporting whether it was charged off before 1996 or after! Remember that. Even the original FCRA did not allow for that. The last activity at that time, meant date charged off, last paid, or closed but did not and never has allowed a creditor to use the DOLA (date of last activity) as a new "Commencement of Delinquency".

The Federal Trade Commission's view on this issue is:

"If an account was reported as a charge off before 1997, the Commission's view has been that it can only be reported for seven years from the date the creditor actually charged it off".

Here is the section of the Fair Credit Reporting Act that protects you in respect to how long items can remain.  You may find yourself quoting this often while repairing your credit.

§ 605.  Requirements relating to information contained in consumer reports [15 U.S.C. § 1681c] Information excluded from consumer reports.  Except as authorized under subsection (b) of this section, no consumer-reporting agency may make any consumer report containing any of the following items of information:

(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than ten years.

(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.

(3) Paid tax liens which, from date of payment, antedate the report by more than seven years.

(4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.

(5) Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.

(b) Exempted cases

The provisions of subsection (a) of this section are not applicable in the case of any consumer credit report to be used in connection with

(1) A credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;

(2) The underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or

(3) The employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.

(c) Running of reporting period.

(1) In general.  The 7-year period referred to in paragraphs (4) and (6) of subsection (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.

(2) Effective date.  Paragraph (1) shall apply only to items of information added to the file of a consumer on or after the date that is 455 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996.

So in summary, (because I know this gets very confusing), just remember that a negative account can remain for 7 years, period. It cannot be extended and you have the law (FCRA) as proof and ammunition to prove to a credit bureau, collector or creditor that it is 7 years from date charged off not date of last activity, which includes a payment.

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