The Fair Credit Reporting Act includes Statutes of Limitations on how long negative credit can remain on your credit report. Here is a quick list for your reference.
Late Payments: 7 years from the late payment date
Collections, Charge-Offs: A late account becomes a collection or charge-off after it is 180 days past due. It must be removed 7 years after the last date of delinquency.
Chapter 7 Bankruptcy: 10 years from the file date.
Chapter 13 Bankruptcy: 7 years after the file date.
Judgments: These are more complex. They have a Statute of Limitations of 7 years; however, they may be revived at any time by the judgment holder, making them last indefinitely until paid.
Unpaid Tax Lien: Forever, no Statute of Limitations.
Paid Tax Lien: 7 years from the date of release.
Word of Advice: File the release with your courthouse so the 7-year clock starts.
Hot Tip: If an IRS tax lien is less than $25,000 and paid, you can use IRS Form 12277 to have it removed within 90 days.
Heartfelt thanks to Chad Kusner, President of Credit Repair Resources LLC, for this information.
Are you curious about how credit repair specialists and certified credit attorneys legally delete bad credit?
Kate W. wrote to tell me that her credit score increased from 613 to 720 after following the system in Repair Your Credit Like the Pros.
“My score has improved 63 points in 15 days.”
~ Posted by user name Amazon Customer
“I have read many credit repair books, but none of them helped me like this one. The book has real advice that has been used and actually works.”
~ Tiffany H., Amazon review
I checked my credit score today using the free site, Credit Sesame. More about what that means in a moment. But first, I was pleased–but not surprised–to see that my score today is 815. Here is how I earned the coveted score of over 800.
Payment History = 35% of the credit score
I have zero late payments on my report. (It wasn’t always that way. More about that later.)
Credit Utilization = 30% of the credit score
If your credit cards are maxed out, you get docked a lot of points, even if all payments are made on time. If your credit cards are over 50 percent of the limit, you get docked points. My credit utilization is only 6%; so because it is under 10 percent, I gain points.
Age of Credit History = 15% of the credit score
My oldest active account is 18 years, 1 month old. If I close that account, I will lose points, so I don’t want to do that.
My newest account is 8 months old, because I opened a credit card within the last year. Once an account is open for six months, it is considered old enough to be included in your credit rating. Also, at 8 months, it has aged enough that it is no longer docking me points for “unknown usage,” meaning they don’t know if I will max it out or pay on time when first opened. This is why you don’t want to open a new account right before applying for an auto loan or mortgage.
Account Mix = 10% of the credit score
The credit bureaus prefer a mix of credit cards, installment loan (such as auto or student loan), and mortgage loan. However, you can still get a score of over 800 without a mix; as is my own case. I have five open credit accounts.
Credit Inquiries = 10% of the credit score
I have zero inquires in the past 12 months, according to Credit Sesame. That seems odd since I opened a credit card just eight months ago. Either Credit Sesame is incorrect or the card didn’t result in a hard credit inquiry. I will have to look into that.
Is Credit Sesame Accurate?
Credit Sesame provides one score obtained from the Experian National Credit Equivalency, which means it is one bureau’s consumer credit score. The consumer score is more lenient than the mortgage score, because it is less risky to give someone a credit card than it is to give them a mortgage. The score from Credit Sesame varies from the actual Experian score by an average of 33 points, according to a study conducted by Doctor of Credit.
Using Credit Sesame is free, gives a good ballpark estimate of your score from one of the three bureaus, and will not hurt your score or show as an inquiry on your credit report.
If You Need to Repair Your Credit (Like I Did)
There was a time when I did not have an 800 score. I unknowingly made some mistakes, including letting a department store credit card payment slide for a month. On top of that, someone else’s late auto payment was showing up on my report. When I purchased my first home as a young, single woman, I had to take an FHA loan, because my score didn’t qualify for a conventional loan.
I took charge of my situation and raced to the top of the chart. You can do the same!
Certified credit repair specialists and experienced attorneys are one way to go. But if you don’t mind taking the time to do the work yourself, you can save $500 to $2,000 in professional fees. Instructions on how the professionals restore your credit and good name are in my book, which is getting great reader reviews on Amazon, and many more emails to me from folks who don’t post reviews. Feel free to check it out here.
Here are four things you should know about how credit cards affect your FICO score:
1) If you carry a balance that is over 50 percent of the limit, you will lose credit points.
To remedy, either call your creditor and ask to have the limit raised, or spread out your spending over an additional card. I am assuming, of course, that you are not overspending for your income and budget. That is another topic altogether!
2) If you pay off your balance in full each month, you will be rewarded with additional credit points.
The credit system recognizes the proper use of credit and adds points to your FICO score when you don’t carry a balance from month-to-month. Moreover, you don’t waste your money paying interest that is non-tax deductible.
3) If your total use of credit is below 50 percent of your total available credit, you will gain points.*
Not only does the system look at your individual credit card balance-to-limit ratio, but it also looks at the total of all your available credit cards. So if you are maxing out all your cards, your score will receive a double whammy in point subtraction.
4) Any payment that is 30 days late will dock your score. If you’re 60 days late, it gets worse, and ditto for 90 days.
If you are 31 days late for the first time and call your creditor immediately, they might give you grace and not report you as late, especially if you are a long-time, perfect-paying customer.
If your one-off late payment has already reported, then you should take steps to get that removed from your credit report. The law gives you the right to dispute the late payment, and many creditors are happy to remove the late payment when you send the right type of letter through the good old-fashioned USPS mail system. Why? Because it is a good business practice for them, and it is within their legal right to do so. As the creditor, they own your credit information.
When you understand how the system works, you are in control of your own credit score.
* If you reduce the 50% credit usage to 30%, you gain even more points.
Having a score of 740+ puts you in the top tier for a conventional mortgage loan. If your score is 800 or higher, you gain respect, bragging rights, and may qualify for slightly better terms, depending on the lender and loan program.
Learn what the credit professionals know that you don’t about restoring credit and your good name. I received an email from a gentleman who read this book and has been following the steps for do-it-yourself credit repair. “Three negative accounts gone, three to go,” he wrote. Yes, credit repair does work when it is done properly.
Unless you’re as cute as a cat or have just won the lottery and plan to pay cash for everything for the rest of your life, you need excellent credit and a high FICO score in order to obtain the best financing, the cheapest insurance premiums, and save money.
Yes, credit repair works! Every business day of the year, good folks are getting bad credit deleted from their credit files. The Fair and Accurate Credit Reporting Act (FACTA) gives consumers the legal right to dispute credit they believe is false, outdated, incomplete, belongs to someone else, or is in any way not 100 percent correct.
By law, the credit reporting agency must verify the fairness and accuracy of the account. If they cannot prove that it is right, then they must delete the disputed item. In America, the law says “innocent until proven guilty,” and that applies to credit as well.
“Why didn’t credit repair work for me?” people ask.
The answer is simple: It is because you went about disputing the incorrect credit the wrong way; and therefore, you shot yourself in the foot, as the saying goes.
Two Most Common Mistakes People Make When Disputing Credit
1) Disputing online.
Listen, the credit bureaus did not set up their online credit reports and dispute system for your benefit. They did it, because it is less work for them, and it prevents people from getting negative credit removed from their credit files.
None of the successful credit specialists I interviewed — from California to New Jersey — use the online system. Why? Because it does not work in the consumer’s favor. They order credit reports by mail and they dispute the same.
2) Writing the wrong type of letter.
People write a lot of things that won’t and don’t work for having bad credit removed. For example, if you write “I didn’t receive my bill on time,” or “I was traveling and my sister was supposed to make the payment,” or “They never sent me the bill at my new address after I moved,” or “I was in the hospital,” then you will not get the negative item removed. Instead, you will “cement” it in your file.
Writing a sad, heartbreaking story won’t work either. One lady I know wrote that the reason her account didn’t get paid was because her family was a victim of 9/11. Talk about a good reason! But it did not work. The representative told me she sent condolences but did not remove the negative item.
There is Hope!
When you write the same type of letter that the successful credit pros write — and use the method they use — then you will get the same positive results they get. I used to work for a brilliant man whom I consider to be the #1 credit expert in the world, and I saw the results with my own eyes. I referred friends in the mortgage business to him, and they saw the same positive results.
Using these methods, which I have written down in clear, easy, step-by-step directions, here is what Jerrid emailed me on May 27, 2015:
Hi Carolyn, I just wanted to let you know that I followed the processes from your book and letters and I have had a charge off from Bank of America with a $3700 balance removed completely from all 4 reporting agencies. Bank of America sent me a letter after the dispute and agreed to not recoup the balance and would not present this to any collectors or take any legal action.
His credit score increased by 65 points!
On June 14, 2015, Amanda Jones posted this on Amazon:
I have read about 3 other credit repair books and this is by far the BEST!! She answers the who, what, how, and why of all techniques where others have been somewhat vague. Plus, it is a good read finished in one day. I thought I was ready to send out my dispute letters but now will revise approach based on what I learned in this book.
You can read additional feedback here.
Credit Repair Does Work!
The Federal Trade Commission reported that 1 in 5 Americans has a mistake on their credit report.
CBS News reported there are 40 million errors on American credit reports.
This should not be! Now is the time to clean up your credit and restore your good name. I will write more on an upcoming blog. For now, if you know someone who needs credit restoration, please feel free to pass along this information, because everyone needs to know there is light at the end of the tunnel.
Experian, one of the three major credit bureaus, has announced they are now selling FICO scores. (FICO stands for Fair Isaac Company, the originator of the proprietary scoring system used by mortgage lenders and other creditors.) Before you race over to their site, there is an important piece of information you need to know.
The three credit scores for sale are using their brand new algorithm called FICO 08. It has some improvements over the old system, such as medical collections are not counted against you since a majority of those are the fault of insurance companies and not the consumer. The problem is that only about 10 percent of mortgage lenders have upgraded to FICO 08.
This means that the scores you buy are likely to be different than the scores your loan officer at the bank, broker, or credit union will get when they pull your credit.
Is it then worth Experian’s fee of $50 (minus a few pennies) to get your scores? That is a personal judgment call; but for me, I would wait and let my loan officer pull the credit report that they will actually be using instead.
If you want the inside information on how certified credit specialists and credit repair attorneys get negative accounts removed from credit files and boost their clients’ credit scores, then you’ll want to check out the newly released book, Repair Your Credit Like the Pros here. With this information, you can do the work yourself and save your money for your down payment.
By boosting your credit score to top tier, you will qualify for more money at the lowest possible rate and with the best terms.
Take control of your own credit rating. Don’t believe the old line, you just have to wait for time to pass, because that is not true. Others have taken control of their credit and raised their scores–and if they can do it, so can you.
You Have Two Choices
To restore your credit and good name, you have two choices. You can hire a professional service, or you can do it yourself.
If you choose to hire a professional service, you want only the best. Personally, I would avoid those law firms that specialize in credit, because the truth is that they set you up with data entry clerks that do nothing special, certainly nothing you couldn’t do yourself for a fraction of the cost. The law firm is merely the image for marketing purposes. In reality, you get better service and better results going with a certified credit specialist.
In addition, I would avoid services that set you up on a monthly fee, because it is to their advantage to work slowly, drawing out the process over as many months as they can in order to collect more monthly fees. If you would like my professional recommendation for two top credit repair services, shoot me an email here.
If you don’t mind taking the time to do your own credit restoration work, you can save yourself the cost. But in order to avoid spinning your wheels sending out letters that will get rejected, you need to follow the same steps that the top certified credit specialists use.
In addition, take care to read the directions first, so that you avoid making mistakes that cannot be undone. For example, none of the effective credit repair specialists order their clients’ credit reports online, and neither should you, because doing so will shoot yourself in the foot–meaning cripple your ability to get derogatory items deleted before seven long years.
When people claim that derogatory credit cannot be deleted and that credit repair doesn’t work, it is because they are going about it the WRONG WAY!
All of the information you need to repair your credit is in my brand new, updated book, now available on Amazon at a low introductory price. Please see here for details, and please pass on this information to other good folks who want to improve their credit in 2015, so that they can make their financing dreams come true.
Like David winning against Goliath, Julie Miller of Oregon won $18.6 million in a lawsuit against the giant credit bureau Equifax.
Julie tried eight times to get the credit company to fix inaccurate, derogatory information from 2009 to 2011, but the bureau was unresponsive. According to the Fair Credit Reporting Act, it is illegal to report negative information that is untrue.
Equifax reported collection accounts that were false, the wrong social security number, and the wrote birthdate. Thanks to this bad information and resulting poor score, she was unable to get a loan she needed to care for her disabled brother.
Finally, she filed lawsuit for “damage to her reputation, a breach of her privacy, and lost opportunity to seek credit.” She won $18.6 million, an amount sufficient to turn her life around.
Tragically, Miller is not alone. As many as 21 percent of citizens have at least one error on their credit report, according to a recent study by the Federal Trade Commission. Moreover, five percent of these errors are significant enough to cause people to be denied the credit they deserve.
It is your legal right to receive one free credit report per year to check for credit inaccuracies. The only website I recommend for ordering your credit report is the one owned by the credit bureaus: www.annualcreditreport.com. Ordering your report from any other site is likely to give you an inaccurate score, possibly incomplete information, and thus would be a waste of your time and energy.
For more information about doing your own credit restoration or getting a derogatory, inaccurate account removed see here. The information is still current now in 2013.