Old Debts and Your Credit Report

?Make sure you get any new payment agreement arrangements documented in writing before you start making any payments on an old debt that shows up on your credit report.

In these times of super low interest rates and much stricter loan qualification requirements, a person’s credit score becomes more important than ever when it comes to your chances of getting a decent interest rate on any type of loan. Obviously, a good credit score is far more desirable than a marginal one, but one wild card in the credit score computation mix is the presence or absence of old debts, or debts that have been paid off on your overall score. One big question that many borrowers have these days is the actual timeline of their credit report which can often vary, but basically most people are in the dark when it comes to knowing whether or not their old debts are still reflected on their credit reports.

The process of checking to see if old debts are still on your credit report starts with checking all three of your scores from the big three major credit bureaus of Equifax, Experian and TransUnion. All three reports are free for one time each year from those companies. However, thee are many other companies that advertise free credit reports, except a closer look at the fine print of their supposed “free reports” will often show that as par of their programs, the consumer must sign up for some other services you may not want or need for a cost, in order to get your free reports. Despite the other enticements, AnnualCreditReport.com is accepted as the one best place go to begin accessing truly free reports.

After receiving copies of all three major credits reports, you can compare them to see if there are any valid debts that are still showing up. The Fair Credit Reporting Act, or FCRA, says that most negative debt items must be removed from your credit report seven years from the first date of delinquency. There are exceptions to the seven-year-rule though, as Chapter 7 bankruptcy filings  last for 10 years, court-ordered judgments last for seven years or until a particular state’s statute of limitations expires, depending on which is longer, and money owed to or guaranteed by the government like unpaid income taxes or student loan debts remain on your credit report indefinitely. However, the FCRA rules only apply to the reporting life of a debt, not the time span of collecting a specific debt. This makes the rules of the state you live in important because your state's statute of limitations for collecting a debt only covers how long the debt can be legally collected through the courts. Unfortunately for debtors, collection companies can still try to collect on a debt outside of the courtroom well past a state’s statute of limitations date

When old debts disappear from your credit report, but are still uncollected, they revert to what are called "stale debts" that can still be sold and resold to outside collection companies for fractional amounts of the original debt. The best way to get rid of an old debt is either to pay it off completely, or at least pay an agreed upon amount of the total debt you owe. If you are successful in negotiating a debt repayment for less than the total amount owed, always make sure you get the new payment agreement arrangement in writing before you start making any payments. Without written evidence of the new agreement, you have only a verbal contract and one that is invalid in court.