Falling Off


Let's discuss the items on your credit report for today. More specifically, what they mean and what can happen to them.


First, your credit report shows you information reported to the credit bureaus about outstanding debts to other companies or institutions. A student loan, credit card, or car loan are all generally reported to the credit bureaus. Your credit report can also incorporate data on whether you are behind on payments or not. Not only whether you are late or behind on payments, but whether a debt has been sent to a collections agency.


Generally speaking, these negative items remain on your credit report for about seven years. After that, some people think they "fall off" the credit report and are no longer valid. However, this is a misinterpretation of the data.


Even though the credit bureau isn't reporting the negative item(s) on your report, that does not mean your responsibility has been absolved. The debt holders can still have records about the debt that they can use. Perhaps they use it to attempt to collect after a long period of time. Perhaps it is sent to a collections agency after late payment information has fallen off your credit report. Either way, in essence and in truth (provided no fraud has occurred), the debt is still your responsibility.


The good news is, taking proactive steps to address back debts, even if they have fallen off your credit report, may be helpful to your overall score. If you catch up and become current, then the lender may report your credit in good standing, which should help your score. Preventing the debt from going to collections can also keep more negative information off the report. This too, should help your score.


We focus much attention on what we can "get" from the credit companies or how we can "avoid" negative consequences. Perhaps the better way forward is to accept responsibility and take the longer road ahead instead of looking for a quick fix.