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When That Collection Notation Will
Cycle Off--For The Last Time |
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In general, most negative account information cycles off your credit report
automatically after seven years. In the past, however, collection accounts
could be restarted over and over again due to the practice of reselling them
to various agencies. Every time the account was sold to a new agency, a new
start date would be generated on the consumer's credit report and, so, a new
seven-year cycle would begin.
To deal with this special situation, the Federal Consumer Credit Reporting Reform
Act of 1996 included a section pertaining directly to the reporting of collection
accounts. According to the act, any account reported in collections on or after
April 1, 1997 may only be reported for one, continuous seven-year period, regardless
of how many times it changes hands. Accounts reported in collections before that
date could conceivably be re-reported one more time, but from that point on, the
seven-year rule would stick.
For example, if you had an account go into collections in 1992, the notation would
stay on your report for seven years, until 1999. If the debt was resold in 1995,
another seven-year cycle would start, and that notation would come off in 2002.
But, if it was sold again in 1998, that would be the last start date of any seven-year
cycle. In other words, that account could never again appear on your report,
paid or not, after 2005.
So, any collection account placed on your credit report on or after April 1, 1997
can remain on a credit report for only seven years, no matter how many times it
changes hands in the future.
For more information on rebuilding credit, you may want to visit our web site at
www.creditmatters.com/channels/credit_basics.asp.
Copyright © 2000, CreditMatters.com
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