Credit checks are your ticket to everything from a new credit card account to a loan for furniture, a car or even a new house. The Federal Reserve Bank of San Francisco's website explains that the credit bureaus gather your financial data and compile reports for lenders. They cover your credit-related activities for several years to give a long-term picture of your credit worthiness.
Lenders check your credit by reviewing your credit reports from the Experian, TransUnion and Equifax credit bureaus. Their review goes back as far as the dates of the information on those reports. Reporting time frames vary, depending on the specific type of information. The Federal Trade Commission (FTC) explains that a bankruptcy stays in your records for 10 years, while most other negative information, like late payments, car repossessions and foreclosed homes, remain for seven years. Closed accounts that were in good standing show up for 10 years, according to the Experian website.
Credit scores are calculated based on your credit bureau files, so they consider information going back seven to 10 years. FICO, the largest scoring company, explains on its website that it considers things like promptness of payments, current and previous account balances and credit limits, length of time you have used credit and how long you have had particular loans and credit cards. Your score continually changes, according to the MyFICO site, so it goes up when old delinquencies or other negative data gets erased.
Everything in your credit reports is visible to lenders who view them while processing your applications, but they do not weigh everything equally. Lita Epstein explains that they look most closely at your recent activity, focusing on the past three to five years. You have a good chance of getting approved for a credit card or loan if you have built up several years of on-time payments, even if you have collection agency accounts or even a bankruptcy in your past.
Negative credit report items do not always get erased when the reporting period ends. You are allowed to get free credit report copies to check their status. The FTC explains that you must get the reports from the official website, annualcreditreport.com. Search for old items, and file a dispute with Experian, TransUnion and Equifax is you find any outdated data. The bureaus let you do this electronically on their websites, and the law gives them 30 days to handle your complaint. Then they are required by the Fair Credit Reporting Act to send you corrected credit report copies so you can be certain the old items are gone.
- Experian: Frequently Asked Questions
- Federal Trade Commission: How to Dispute Credit Report Errors
- MyFICO: What's In Your FICO Score
- MyFICO: About Credit Scores
- Wallet Pop: How Long Does it Take to Rebuild Credit After Bankruptcy?
- Federal Trade Commission. "Utility Services." Accessed July 2, 2020.
- AnnualCreditReport.com. "Your Rights to Your Free Annual Credit Reports." Accessed July 2, 2020.
- Experian. "Free Credit Report." Accessed July 2, 2020.
- Equifax. "Free Credit Reports." Accessed July 2, 2020.
- TransUnion. "Personal Credit Report - Determine if You Qualify." Accessed July 2, 2020.
- Consumer Financial Protection Bureau. "How Do I Get a Copy of My Credit Reports?" Accessed July 2, 2020.
- Experian. "Notification of Rights for Massachusetts Consumers." Accessed July 2, 2020.
- Federal Trade Commission. "Free Credit Reports." Accessed July 2, 2020.
- Fair Issac Corporation. "What's in Your Credit Report?" Accessed July 2, 2020.
- Consumer Financial Protection Bureau. "If a Credit Reporting Error Is Corrected, How Long Will It Take Before I Find Out the Results?" Accessed July 2, 2020.
- Federal Trade Commission. "Disputing Errors on Credit Reports." Accessed July 2, 2020.
- Experian. "Should I Add a Consumer Statement to My Credit Report?" Accessed July 2, 2020.
- Fair Issac Corporation. "What Is Payment History?" Accessed July 2, 2020.
- Equifax. "What Is a Charge-Off?" Accessed July 2, 2020.
- Discover. "What Happens When My Credit Card Goes Delinquent?" Accessed July 2, 2020.
- Experian. "Can I Negotiate With Debt Collectors?" Accessed July 2, 2020.
- Experian. "Is It Possible to Owe Debts Not on Your Credit Report?" Accessed July 2, 2020.
- Experian. "How Much Credit Should I Use?" Accessed July 2, 2020.
- Fair Issac Corporation. "What Is Amounts Owed?" Accessed July 2, 2020.
- Fair Issac Corporation. "Credit Checks: What Are Credit Inquiries and How Do They Affect Your FICO® Score?" Accessed July 2, 2020.
- Consumer Financial Protection Bureau. "3 Common Credit Issues and What You Can Do to Fix Them." Accessed July 2, 2020.
- Fair Isaac Corporation. "Will Closing a Credit Card Help My FICO® Score?" Accessed July 2, 2020.
Based in Kissimmee, Fla., Barb Nefer is a freelance writer with over 20 years of experience. She is a mental health counselor, finance coach and travel agency owner. Her work has appeared in such magazines as "The Writer" and "Grit" and she authored the book, "So You Want to Be a Counselor."