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is bad credit really wiped out after 7 years?
June 8, 2014 6:31 AM   Subscribe

I will try to forgo going into a lot of detail, but certain dramatic events in my life caused me to default on a couple of credit cards years ago and sunk my credit rating into the toilet. I never made any payments on it again and never got another credit card because I had other things on my mind. And Technically I wasn't supposed to be alive now either (Cancer) but suprisingly I survived so now instead of worrying about death I guess I'm worrying about things that normal people worry about now. Like credit rating. I've read that after 7 years you get a clean slate on a debt. It's almost been 7 years since the last payment I made and I'm wondering if I will get a clean slate after that.
posted by manderin to Work & Money (8 answers total) 11 users marked this as a favorite
 
The length of time things stay on a credit report vary by type of item - inquiries drop off after 2 years, some types of bankruptcies stay on a credit report for 10 years. Here's what Experian, a major credit reporting agency says:

Late payments remain seven years from the original delinquency date. A single late payment is deleted at seven years. If there was a series of late payments (not paid at 30 days, or 60 days, or 90 days) and then brought current, the payments would be deleted seven years from the first one missed in the series. If the account was never brought current and charged off and placed for collection, the entire account will be deleted based on the date the account became late and was never again current. This is known as the original delinquency date.

Collection accounts remain seven years from the original delinquency date of the original account. Collection accounts are treated as a continuation of the original debt and are deleted at the same time.


You can get a copy of your credit report for free at annualcreditreport.com. You are entitled to one report every 12 months from each of the three major credit reporting agencies (so a total of three reports per year).
posted by insectosaurus at 6:49 AM on June 8 [2 favorites]


Get copies of your credit report and FICO scores. I go through My FICO. It'll cost about $15.

I've rebuilt some shitty credit and its surprisingly easy. I started with a cash deposit VISA and some store cards. Then every one in the free world wanted to give me a card.
posted by Ruthless Bunny at 7:01 AM on June 8 [2 favorites]


insectosaurus has already answered your question with respect to your credit report.

You do not really get a "clean slate" because you are still liable for your debts. You are always legally and morally obligated to pay your debts. However, after the statue of limitations on your debt expires, you can't be sued for the debts. In New York (where it appears you live), the statue of limitations on debt is 6 years. The statue of limitations is a particularly tricky thing to deal with, because various actions on your part can reset the time. For instance, making a repayment agreement can reset the clock on the statue of limitations. In addition, credit collection agencies will still likely contact you about these debts even if you are not required to pay them (although this contact can be legally questionable, it still occurs). Without further (and very specific) information, we cannot determine whether or not the statue of limitations might have expired on your debt.

In other words, if you want to take advantage of your credit report resetting and the statue of limitations starting to kick in, you need to be very careful with how you deal with the debts you incurred that you do not plan on paying off. I like to point people to CreditBoards for information about how to avoid paying for debts.
posted by saeculorum at 7:03 AM on June 8 [3 favorites]


You are always legally and morally obligated to pay your debts.

Unless discharged in a bankruptcy, etc.

The 'seven years' thing is in the Fair Credit Reporting Act, and it applies to most negative items. You can dig through the whole thing if you're inclined.

Bankruptcy may be reported longer. Tax liens or other items might be reported longer. As a general rule, though, after seven years most bad things should have aged off your report.

Note that items might drop off sooner, there's no requirement that anything actually be reported.

Also note that public records such as civil court judgments are available through other sources than credit reporting. They might not be part of your credit report, but by definition, as public records they're findable indefinitely.
posted by gimonca at 9:45 AM on June 8


It's not as instantaneous or "clean" as all that, but yes stuff rolls off and your FICO starts going back up.

Like RuthlessBunny, I rebuilt my credit with secured (and then a couple of years later unsecured but starting with very tiny limits which increase over time) credit cards. Between the stuff that does linger and your lack of good credit, you will still slog through years of shitty interest rates but you will be able to get financing and credit.
posted by Lyn Never at 9:49 AM on June 8 [2 favorites]


Yes it does and absolutely. The only strongly recommended point is that STOP all contact with anyone from the credit company/whoever you owe the money or who think you owe the money to-i mean ALL contact. No emails, no phone call picking up, no replying, no admitting/agreeing to half off deals that they offer you. NOTHING. You have to completely not exist. Any contact you make or reply to RESTARTS your 7 year period. ANY.

I did this and it worked. I once made a mistake of agreeing to half off deal and paid $900. I never heard from them again and the account showed up years later still on my credit report.

After seven years, you write a strong letter to them saying that it is against Federal laws to have their account in the credit report. It will disappear.

However if you establish any contact, however small, you will restart the 7 year period.
posted by jbean at 10:13 AM on June 8 [1 favorite]


The only contact I've had in the last 7 years is for a phone account that wasn't mine. I think it was verizon and the credit report said I owed a couple of hundred dollars I think, but I never had that phone number. So I called to tell them that. I don't remember what they told me over the phone, but I didn't agree to pay anything that's for sure.
posted by manderin at 10:18 AM on June 8


There are two sides to rebuilding credit. One is waiting for the bad stuff to eventually fall off, and the other is having positive credit history. You're going to need to get some kind of reporting account (car loan, credit card, etc.) on there that you're paying on time (every month without fail!!) so you have a credit history.

When I rebuilt my credit, I started with an auto loan (at 24.99%, OMG) on a relatively cheap used car and a gas station credit card. Creditboards, linked above, will help guide you to which credit cards will be available to you (Capital One was my first "real" credit card when I was rebuilding). Charge things on them, and pay them IN FULL every month. If you get a car loan, refinance to a lower rate as soon as you are able to do so (I cut my rate in half after about 6 months, then in half again about a year later).
posted by rabbitrabbit at 10:36 AM on June 9


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