A delinquent loan should no longer appear on your credit report if the loan’s more than seven years old. But if it does, take steps to remove it ASAP.
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Dear Credit Score Report,
I have a small bank loan (less than 3K) that originated in 95. The originator placed in write-off status in 2000-2001. I found out it was sold to a collection agency around 2001. I recently viewed my credit report and this loan appears and shows to have been updated in 2004. How long can this loan continue to appear on my credit report? If this agency were to sell this loan again, could the new owner report this as a new loan on my credit? What can I do to have this removed from my credit once and for all? Thanks — LO
Based on its age, this delinquent loan should no longer appear on your credit report — but since it does, you should take steps to remove it.
The experience of having your loan sold is pretty common and of little significance to your credit. In fact, LO, one loan can even make multiple appearances on a single credit report — charting the course your debt has taken from one lender or debt collector to another — without having any real effect on your credit. However, your situation is different because the loan in question has negative information associated with it that is more than seven years old.
While positive items typically remain on a credit report for 10 years or more, negative items have a shorter shelf life. Major credit bureaus Equifax, Experian and TransUnion say that your negative item should have already been removed. “Information is deleted seven years from the original delinquency date of the original account,” says Danica Ross, spokeswoman for Experian. “If the account was charged off in 2001, the original delinquency date would have been sometime before that, so the account and any subsequent collection should have been deleted from the file.”
Luckily, when you dispute errors on your credit report, the law — in the form of the Fair Credit Reporting Act , or FCRA — is on your side. “Legally, under FCRA, a data furnisher is obligated to not report this as a new account,” says Equifax spokesman Tim Klein.
The FCRA says the company that supplied the erroneous data to the credit bureau is responsible for correcting it. But, unfortunately, it won’t be as simple as asking them nicely. To protect all your rights under the law, you’ll need to contact both the information provider and the credit bureau whose report features that item.
It sounds like you’ve already looked at a credit report from at least one of the three major bureaus. Next, you’ll want to check your reports from the others to see if this unpaid item makes another appearance. You can request one free copy of your credit report from each bureau once every 12 months at AnnualCreditReport.com. (Please note that there is no requirement for the bureaus to provide free credit scores.)
If you’ve already gotten your one free report from each of the bureaus, you may still be able to get another one, depending on your circumstances. You don’t indicate if any of these apply to you, but the FCRA says you’re also entitled to a free credit report if:
- You were denied credit, insurance or employment due to information in your credit report. The company you applied to must give you the appropriate credit bureau’s name, address and telephone number. If you contact the bureau within 60 days of receiving a denial notice, they must provide your report for free.
- If you are on welfare, have been victimized by fraud or are unemployed and plan to look for work within 60 days.
Once you learn which bureaus’ reports include the error, contact them. The information below should help:
- TransUnion says that based on the age of this debt, you should call them at 800-916-8800, option 3. “In most cases, we are able to resolve such matters quickly on the consumer’s behalf,” says TransUnion spokesman Steve Katz.
- Experian says that its credit reports include dispute instructions. You can call the bureau directly using its toll-free number, 888-397-3742. Ross says that if you are not provided with an appropriate automated selection response, you will be transferred to a representative or you can press zero and request an agent to assist you.
- Equifax say that errors can be disputed by going online or writing to CSC Credit Services, P.O. Box 619054, Dallas, TX, 75261-9054. “Contact our Consumer Service Center so that they can reinvestigate and if determined appropriate, delete and suppress the account from future reporting by the same collection agency,” Klein says.
Since the debt collector appears to have broken the law by reporting a too-old item to the credit bureaus, you may also want to report that collector to the Federal Trade Commission. The FTC says you can file a complaint at its website or by calling its toll-free helpline 877-382-4357.
Another way to address this debt, LO, is by simply paying it off. TransUnion says that, otherwise, it could continue to be pursued in collections where it could be resold. However, in your case, Experian says you should first dispute the item. “We always encourage consumers to fulfill their debt obligations. Still, this should not be on the report at all, so the consumer should dispute it,” Ross says.
If you opt not to pay, based on the debt’s age, collection agencies may no longer have a case against you. On its website, the FTC addresses the topic of time-barred debts, which are so old (between 3 and 10 years old in most states) that debt collectors may no longer sue you to collect them. You may want to check with your state’s attorney general to see if your debt falls into this category.
Whether or not you end up paying this debt back, by challenging damaging mistakes on your credit report, you’ll improve your credit score and save yourself money in the long run.