Credit 101

The subject of credit and what is included on a consumer’s credit report can be a source of much debate, confusion and sometimes frustration. Outlined below are some of the more important facts relating to credit to gain better insight into a person’s credit report and history.

What is included in a credit report?

First and foremost the credit report will contain specific account information that is associated with the consumer, meaning an account that the individual has opened, cosigned, authorized or filed jointly with a spouse or relative. This information, commonly know as trade-lines, includes the date opened, original account balance, current balance, credit limit, monthly payment, and payment history. Additional things that may be included within a trade-line are account numbers (often times incomplete or scrambled for security) and contact information for the creditors.
In addition to creditor trade-lines, a report can include:

• Public records – Tax liens (state or county court records), judgments,
federal district bankruptcies

• Identification information – Current name, Social Security number, full
name, address, and possibly date of birth and employers past and present.

In addition, the report will show variations of name, social and address
based upon individual bureau’s creditor reporting and inquiries

• Inquiries – Individuals or companies that have “inquired” into an
individual’s credit history and obtained a copy of a credit report

• Statements -- Text that describes disputed information or possible
reported fraud. Statements are listed following a no-resolution dispute
between a borrower and creditor

• Additional Information – Many reports will also include fraud
statements from fraud detection products and/or OFAC (Office of Foreign
Assets Control) which searches a national terrorist data base
Active and “good standing” credit may last on a consumer’s credit report for an indefinite amount of time while the majority of derogatory or negative information remains for seven years. Following is a basic guideline for how long a trade-line will remain on the credit report:

• Late payment accounts/delinquencies – 7 years from the initial date of
missed payment

• Charge-Offs – 7 years from the initial date of missed payment regardless
of whether or not the account has since been paid. “Paid charge-off” will
be reflected if paid

• Collections – 7 years from the initial date of missed payment regardless of
whether or not the account has since been paid. “Paid collection” will be
reflected if paid

• Closed accounts – Accounts in good standing will remain for 10 years
while derogatory accounts will be removed after 7 years from the date of
closure. This applies to accounts that were closed by either the consumer
or creditor

• Bankruptcies – Chapter 13 remains for 7 years from the filing date.
Chapters 7, 11, and 12 remain for 10 years from the filing date. Accounts
included in bankruptcy will remain for 7 years from the date reported in
bankruptcy

• Tax liens – 15 years from the date of filing. If lien is paid it will remain
for 7 years from the date of payment

• Judgments – 7 years from date of filing regardless of payment status

• Child support judgments – 7 years from date of filing regardless of
payment status

• Lost credit card – 2 years from date reported lost as long as there are no
delinquencies. In the case of delinquent accounts, 7 years from the date of
delinquency

• Inquiries – The majority of inquiries will remain and be factored into the
overall credit history for 2 years, even though many credit reporting
companies will only display 3-6 months worth of inquiries

An individual is responsible for any account opened in his or her name, accounts that
have been cosigned by the individual, any joint accounts, and potentially any account that has been guaranteed by the individual, even if it is a business account. In the case of a divorce, a divorce decree does not impact any account that was contracted during the marriage. BOTH individuals are responsible for the account even if one person has been deemed responsible by decree. Only the creditor can change the status of an account. It is recommended that following a divorce, creditors be contacted immediately to change account status.

FOR THE REST OF THE ARTICLE IN PDF FORMAT CLICK HERE