Just how long does that black mark stay on your credit report?
SEATTLE -- It's scary when you can't pay your bills, and when creditors are calling and sending you those threatening letters. But it's important to know long that debt stays on your credit report.
"Generally bad marks can stay on there only about seven (and a half) years and it starts with the day you went delinquent on the account," said Liz Pulliam Weston, an award-winning reporter for MSN Money and the author of the book "Your Credit Score." "So if your account is sold from one creditor to another it does not restart the clock."
She says the 7 1/2 year clock is for a typical issue like a late payment or a charge-off. Issues like bankruptcy can last longer.
Weston says one of the biggest mistakes people can make when they're facing creditors is to hide. She says old advice used to be if a creditor or collection agency called, to ignore them. But these days, that is not the case as creditors now will sue.
"And once you're in court, you're in a world of trouble," Weston said, adding even if you can't pay, talk to the creditors and collection agencies to let them know what is going on tell them you don't have any money now but intend to pay them when things get better.
What do you do if you get a letter or call saying you owe money, and you know the debt is not yours? Weston says it's becoming a common situation.
"A lot of these debts are sold over and over and they're so old there's no documentation attached," she said. "So the first thing you should do is write a letter to the collection agency and say, 'verify this debt; validate it for me... and if you can't then stop contacting me.' A lot of times that will make it go away if it's one of these cases of mistaken identity."
Weston warned never go give out bank account numbers or authorize a bank transaction of any kind over the phone.
"Because once they have that information, they can keep going after your bank account," Weston said.
Weston says you can correct false information on your credit report, but you can't remove bad but correct information from the report.
"A lot of credit repair outfits try to promise that you can have a new credit report and get rid of true negative information," she said. "But if it's true, it's going to be on there for 7 1/2 years, you just have to live with it; there is no magic bullet to clean your credit report, even if you pay them hundreds of thousands of dollars."
For More Information:
Debt Collection FAQs
Dealing with Debt Collectors
Credit Repair: How to DIY and Avoid a Scam
"Generally bad marks can stay on there only about seven (and a half) years and it starts with the day you went delinquent on the account," said Liz Pulliam Weston, an award-winning reporter for MSN Money and the author of the book "Your Credit Score." "So if your account is sold from one creditor to another it does not restart the clock."
She says the 7 1/2 year clock is for a typical issue like a late payment or a charge-off. Issues like bankruptcy can last longer.
Weston says one of the biggest mistakes people can make when they're facing creditors is to hide. She says old advice used to be if a creditor or collection agency called, to ignore them. But these days, that is not the case as creditors now will sue.
"And once you're in court, you're in a world of trouble," Weston said, adding even if you can't pay, talk to the creditors and collection agencies to let them know what is going on tell them you don't have any money now but intend to pay them when things get better.
What do you do if you get a letter or call saying you owe money, and you know the debt is not yours? Weston says it's becoming a common situation.
"A lot of these debts are sold over and over and they're so old there's no documentation attached," she said. "So the first thing you should do is write a letter to the collection agency and say, 'verify this debt; validate it for me... and if you can't then stop contacting me.' A lot of times that will make it go away if it's one of these cases of mistaken identity."
Weston warned never go give out bank account numbers or authorize a bank transaction of any kind over the phone.
"Because once they have that information, they can keep going after your bank account," Weston said.
Weston says you can correct false information on your credit report, but you can't remove bad but correct information from the report.
"A lot of credit repair outfits try to promise that you can have a new credit report and get rid of true negative information," she said. "But if it's true, it's going to be on there for 7 1/2 years, you just have to live with it; there is no magic bullet to clean your credit report, even if you pay them hundreds of thousands of dollars."
For More Information:
Debt Collection FAQs
Dealing with Debt Collectors
Credit Repair: How to DIY and Avoid a Scam
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