Credit reports have a huge influence on so many aspects of our lives – from our mortgage rate to our ability to secure a loan to various job prospects. So it’s important to understand how ratings are formulated, how to improve scores and how to correct mistakes (which are more common than you would think and can cost more than you might realize).
Details of what is allowable (and what isn’t) is found in 15 U.S. Code Section 1681c. The law states consumer reporting agencies can’t make a report that includes:
- Cases that fall under the Bankruptcy Act or title 11 that date back more than 10 years.
- Records of arrest or civil lawsuits or civil judgments that go back more than 7 years or beyond the governing statute of limitations expiration (whichever is longer).
- Tax liens that have been paid and which date back more than seven years.
- Accounts that have been placed for collection or charged to profit-and-loss that date back more than seven years.
- Any other adverse information (other than a criminal conviction) that goes back more than seven years.
- Name, phone number or address of any medical provider that has filed notification with the agency (with a few exceptions, including credit holder’s engaging in the business of insurance).