Waiting for collections to fall off of your credit report seems like a great option. But there are pros and cons.
There are three major credit reporting agencies: Experian, TransUnion, and Equifax. They may be separate agencies, but they do the same thing-provide a record of credit histories and activities to both consumers and lenders.
Negative accounts remain on file for seven years from the original date of delinquency. This date is used to determine when the delinquent information is deleted from your credit report – no matter who owns the debt. There’s a notion that borrowers who simply “wait seven years” will find relief from the credit mistakes of their past, just by virtue of having the information fall off the credit report. But is this a good idea?
The pros of waiting:
- It’s true that by waiting out the seven year period, you may be able to have old credit issues fall off the books without having to pay a lawyer, file bankruptcy, or take other steps that cost you money. The peace of mind you get waiting out this period will offset the stress of dealing with creditors, credit reporting agencies, etc.
The cons of waiting:
- They don't always fall off automatically. - Although there are reporting limitations in place, there are still instances of accounts reporting past this time. You will need to continue to monitor your report to ensure any accounts reporting past the seven year period have been removed.
- During the seven years, creditors can still sue you. - The “seven year rule” has to do with reporting limitations. There’s also a statute of limitations. The statute of limitations is not standardized nationwide, and your timeline may vary depending on where you live. This statute of limitations allows you to be shielded from lawsuits or collection judgments based on the amount of time that has passed. It is important to note that before the statute of limitations is up, creditors can file suit for any alleged debts. Most statutes of limitations fall in the three-to-six year range, although in some jurisdictions they may extend for longer depending on the type of debt.
- You lose out on time and your finances. - Lastly, it's important to note the loss of time and finances that comes with waiting for the seven year period. A lower credit score can result in higher interest, higher down payments, and overall higher monthly payments. In many cases, consumers will run into situations where they will need to leverage their credit. Based on that , “waiting seven years” isn’t quite as foolproof as it might seem. It is better to find a solution now, to prepare for your financial future.
Before making any financial decision, consult an expert.
Before deciding on this course of action, it’s always a good idea to consult with a credit counselor or credit expert. MSI Credit Solutions leverages your consumer rights and works on your behalf to remove questionable negative items from your credit report which results in an increase to your credit scores.
Call MSI Credit Solutions today at 866-217-9841 and receive a FREE consultation.
MSI Credit Solutions provides superior credit restoration and comprehensive consulting services that are reliable and affordable. Call today for your free credit repair consultation! Contact us at (866) 217-9841.
*The information in this article has been provided strictly for educational purposes.