Weathering The Storm

The Federal Credit Reporting Act Section 605 states that negative information stays on a consumer credit report for no longer than seven years (bankruptcy stays on for ten years).

 Can you weather the storm for seven years? Weathering the storms means waiting seven years for the negative information to drop off of your credit record. If within seven years, you know that there is not a chance of you raising the thousands of dollars needed to pay off your debt, then what do you have to lose?

“Mike” suffered from a long illness that prevented him from working steady. Since his first priority was to keep a roof over his family’s head by paying the mortgage, he suffered an automobile repossession and several charge-offs from credit cards. Charge-offs are when creditors decides after an extended period of time that they will not be paid, and they write the debt off as a loss. The charge off stays on your credit report for seven years.

Of course, there are exceptions to the seven-year rule such as credit transactions and life insurance that are greater than $150,000 and employment when the annual salary is greater than $75,000. In cases such as this, a creditor or a potential employer can obtain information about your credit history beyond seven years.

Anyway, back to “Mike”. After he fully recovered from his illness, he was able to repair an old automobile to get back and forth to work. During the course of his illness, a little over three years had elapsed. After another four years, the vehicle repossessions and charge-offs were no longer on his credit file. Mike had a fresh start with his credit without filing bankruptcy.