November 6, 2017
Orion’s brokers work with thousands of borrowers every year, and therefore we look at thousands of credit reports. Our broker clients are often asked by the borrower, “How long does an item stay on a credit report?” The safe answer is "it depends." Most will answer "7 years" which is not 100% correct. Consider the typical derogatory account such as a charge off, profit & loss, or collection will stay on a report for 7 years FROM the Date of Last Activity or DLA on the credit report. DLA is a BIG distinction because it restarts the clock for counting down 7 years.
For example, if every 6 years someone paid a dollar towards the derogatory account, the clock would reset from the date of the payment extending the life of the item appearing on one’s credit report. Consequently, a borrower would die of old age before the item aged off their credit report. Additionally, if the derogatory account sells to another creditor the client will also receive another 7-year sentence, so the answer "7 years" is just not correct. Even late payments and child support payments stay on credit reports for 7 years until the last scheduled payment.
So, if someone misses a payment on month 1 of a 30-year mortgage, they could face 37 years of this payment reporting late! Civil Judgements are 7 years from the filing date. Chapter 7 bankruptcy (BK) itself is 10 years but the accounts included are 7 years from the discharge date. Chapter 13 BK is seven years after satisfaction or 10 years from the file date depending on the credit bureau’s policy. Federal and state tax liens have NO statute of limitations, once satisfied, then it is 7 years. Hard inquiries last two years however the damage only lasts one.
Orion, and our brokers, takes credit reporting very seriously, and we work with our clients vigorously to understand their client’s credit, and to make sure it is accurate. For further details see the link below for Fair Credit Reporting: https://www.fair-credit-reporting.com/credit-laws/credit-reporting-periods.html.