[M]ost negative information can stay on your credit report for seven years. Have you ever wondered why the magic number is seven and if there is any way around it?
Congress instituted the time for negative data to remain on credit reports back when the Fair Credit Reporting Act was put in place. Many people believe it has something to do with the statute of limitations, but the fact is that each state decides on the SOL and it can vary.
Could Things Change?
Congresswoman Maxine Waters has submitted a bill to Congress to shorten the length of time. Other countries have a shorter reporting time than the U.S. However, lenders are hesitant to see it changed, believing that it will cause more people to get credit that shouldn’t.
For those consumers who have made mistakes in the past and are trying to improve their credit, many of them would like to see the change made. They would not be hampered by past mistakes that they can’t undo. On the other hand, there is real concern that shortening the reporting time would allow people to continue making mistakes since they wouldn’t be penalized as long.
In the Meantime
Whichever side of the reporting timeline you are on, one thing holds true. Negative information impacts your credit score less over time. A mistake from four or five years ago will not lower your score as much as one made in the last six months. In fact, most experts agree that the greatest amount of damage is any negative information reported in the last two years.
Once two years has passed, the information won’t have much of an impact on your score even though it will still show on your credit report. What this means for people trying to improve their credit score is that if they continue to pay their bills on time and focus on responsible credit management now, their scores will improve even if negative information is still listed on their credit reports. While it is no quick fix, it does give you hope that you can overcome past mistakes. So, don’t focus on the number seven with your credit score. Instead, think about the number two and aim for two years of perfect credit management.
