Did you know some items remain on your credit report forever?


By Michelle L. Black

You are probably familiar with the concept that most negative credit report items have an expiration date. There are very specific guidelines regarding credit reporting statutes of limitations which are spelled out in the Fair Credit Reporting Act (FCRA).

Thankfully for consumers, most negative items on a credit report have to be removed somewhere between seven and ten years. Foreclosures spend seven years on your credit report, for example.

However, there are a few items which do not have a credit reporting expiration date. Check out the list below of the types of items which are legally allowed to hang around and haunt your credit reports forever.

Unpaid Tax Liens

When you pay off an outstanding tax lien and the lien is released it is required to be removed from your credit reports after seven years from the date of release. Better yet, if your lien is withdrawn then it can actually be removed from your credit reports immediately.

Unpaid tax liens, unfortunately for the taxpayer, can remain on your credit reports forever. Another frustrating fact regarding outstanding tax liens is that fact that these liens can make it impossible for you to qualify for a mortgage, regardless of how high your credit scores climb.

However, the good news regarding federal tax liens is that you may only need to set up an approved payment plan in order to be eligible for a withdrawal under the IRS Fresh Start Program.

The credit reporting agencies - Equifax, TranUnion, and Experian - do not currently include withdrawn tax liens on credit reports. So, if you are granted a withdrawal then you can request for the lien to be removed from your credit.

Outstanding Federal Student Loans

The Fair Credit Reporting Act (FCRA) is actually silent on the subject of federally guaranteed student loans. Instead these government guaranteed loans are governed by the Higher Education Act.

As a result, federal student loans which have gone into default do not follow the 7 year deletion rule which most other defaulted accounts must adhere to under the FCRA. In other words, defaulted student loans are legally allowed to remain on your credit reports indefinitely.

You Are Not Out of Options

If unpaid tax liens (especially federal liens) or defaulted student loans are plaguing your credit reports that does not mean that you condemned to spend the rest of your life in credit prison, never able to qualify for a loan again.

On the contrary, several rehabilitation plans or payment options may be available to you to help you get these outstanding issues resolved and enable you to begin rebuilding your credit.

Other Exceptions

1. When Borrowing Over $150,000.

If you are applying for a loan higher than $150,000 then, according to the FCRA, any item on your credit reports which was previously purged off due to the age of the item (i.e. older than 7 or 10 years) could actually be included on your credit reports again. For example, if you had a 20 year old foreclosure it could legally be included on your credit reports when applying for a loan in excess of $150,000.

2. When Applying for Certain Jobs.

Credit reports (not scores) are often used for employment screening purposes as well. If you are applying for a job with an annual salary of $75,000 or higher then credit reporting statutes of limitation under the FCRA are suspended as well. As a result, previously purged credit report items could legally be allowed to show up on your credit reports.

3. Insurance Screening.

The final exception to the 7-10 year credit reporting rule can come into play when you apply for a life insurance policy valued at $150,000 or higher. Should a credit reporting agency choose to provide an insurance provider a more extensive view of your past credit history, including those items which have aged off of your standard credit reports, then they have the legal right to do so.

The Catch

Although in the case of the 3 exceptions above the credit reporting agencies are allowed to include information which would be outdated on a standard credit report, they are probably not going to choose to do so. In fact, it would be unheard of for a previously aged off account to reappear on your credit reports even if one of these specific exceptions applied to your situation.

About the Author

Michelle Black is an author with nearly a decade and a half of experience, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars across the country. She is an expert on improving credit, budgeting, and identity theft.

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Written on September 23, 2016
Self is a venture-backed startup that helps people build credit and savings. Comments? Questions? Send us a note at hello@self.inc.

Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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