In credit reporting, negative information can only stay on your credit report for a maximum of 10 years for a Chapter 7 bankruptcy and seven years for everything else—right?
The Fair Credit Reporting Act (FCRA) does mandate that the credit bureaus remove negative information from consumers’ credit reports within 7-10 years depending on the type of information.
While this is true most of the time, there are three exceptions to this rule, meaning that certain negative items could potentially stay on your credit report permanently.
If a consumer is going to apply for a job that pays $75,000 or more, and the employer uses a credit report as part of the employment screening process, the credit bureaus are allowed to include information on this report about derogatory events that occurred more than 7-10 years ago, such as an old bankruptcy or old collection accounts.
If a consumer applies for a life insurance policy with a value of $150,000 or higher, then the credit reporting agencies are technically allowed to include negative information that is more than 7-10 years old on the person’s credit reports.
If the consumer applies for credit in the amount of $150,000 or more, this also qualifies as a case where the credit bureaus could include old negative information that normally would not be listed on the consumer’s credit report.
The interesting thing about this exception is that it includes most mortgages, meaning that if you apply for a mortgage today, there is a good chance that you could fall into this category of exceptions to the FCRA regulations regarding negative information.
By now, you may be concerned that derogatory credit items that you thought were ancient history could haunt you in the future, in the event that you apply for a high-paying job, purchase life insurance, or apply for a mortgage.
However, there is no need to panic. While the credit bureaus are theoretically allowed to do this under the FCRA, that doesn’t mean that they choose to do so—and fortunately, they don’t.
Rather than maintaining old information to be used in specific situations, they simply default to applying the same 7-10 year policy across the board.
So if you do apply for a job that pays $75,000 or more, a $150,000 life insurance policy, or $150,000 in credit, you don’t have to worry about old negative items being revealed on your credit report.