Common Questions

Why does most negative information stay on my credit report for seven years?

In Washington, D.C. at one of the many sub-committee hearings held on Urban Affairs and Coinage, someone asked a high-ranking credit bureau official why we have the seven-year rule and ten-year rule for bankruptcies. The official had no answer. It has been said that in biblical times seven years was how long you spent in debtor's prison. A professor at Brigham Young University said, "seven years was how long a city was abandoned when destroyed, it wasn't purified to be re-inhabited until seven years." Or on a more superstitious level -if you break a mirror it's seven-years bad luck. Unlike the tracking of a new drug to see the effects of an experimental operation, the seven years was handed to us and accepted in blind obedience without any merit or question.

To make a few comparisons: Canada only has negative data on credit reports for six years, the Better Business Bureau, only goes back on companies for three years no matter what their reputation is. Check Systems, one of the nations largest bad check reporting agencies employed by banks, only goes back five years.

The idea behind the seven year rule is to create a credit penalty for the consumer who doesn't pay their debts. But, when that consumer does pay off a delinquent debt, shouldn't the penalty be removed? Afterall, the debtor has already had to pay late fees, increased interest charges and other penalties. Even speeding tickets and fines are paid and forgiven much sooner than a paid account on your credit report.

A poll conducted in 1993 reflected that 83% of Americans believed when they paid an account in full, it should be deleted from their credit reports. It would be much more fair if credit reports reflected the current status of the consumer's financial affairs. But, the bureaus and creditors don't really care what's fair and what's not.