U.S. consumers often find it difficult to banish old collection information from their credit reports — even when the statute of limitations kicks in. What can you do to clear your good name? A little digging, some good paperwork habits, and the guts to dispute an old collection item from your credit report.
Before we dig into the details, we’re not talking about “hard” and “soft” inquiries that creditors make on your credit reports. Soft queries don’t even appear on your credit report. Hard queries, normally from actual credit applications, disappear after two years and aren’t even a big factor after one year on your credit report.
Back to the old debt and collections that appear on your credit report. First, you should thoroughly review your credit report (you can get a free report every year by law). Focus on the accounts from the original creditor. If it’s not there, then the debt has expired and the information has already been deleted from your account.
In particular, look for old debts where the reporting period has expired. By and large, all debts that appear on your credit report can’t exist on your report for more than seven years. Generally, late payments are the most common item that sits on your credit report for seven years.Charge-offs, debts a creditor has deemed “uncollectible” and collection agency debts also must disappear after seven years. Student loans and foreclosures fall into the same statutes of limitation (bankruptcies go away after 10 years).
Any debts that are paid off but still appear on your credit report even after seven years should be marked up. When you’ve completed your credit report research, send a copy of your credit report with the “accounts in dispute” marked up, along with an explanation that the debt has been repaid and that the reporting period has expired, to each of the three major credit reporting agencies: Equifax (Stock Quote: EFX), Transunion and Experian (Stock Quote: EXPN). By law, each agency has up to 60 days to investigate your claim and remove it from your file, if applicable.