A person's credit report is a proof of how organized a person is in his financial arena. It is a very important document based on which a person is eligible to apply for loans. Thus it is very important to maintain a clean credit report, especially at a time when the country is suffering from major debt problems. A good credit report increases your financial credibility and makes you eligible for loan approvals. But at times there are some mistakes in the credit report which hampers your financial status in a big way.
Sometimes you can become a victim for the misleading information in your credit report. In such cases there is a stipulated time for the reporting period, which is generally seven years. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place. But there are a few exceptions to this rule too.
Any delinquent account placed for collection both internally or by reference to a third-party debt collector, whichever is earlier-charged to profit and loss or subjected to any similar action. The seven-year period is calculated from the date of the delinquency that occurred immediately before the collection activity. For example, assume that your payments on a loan were late in January, but that you caught up in February. You were late again in May, but caught up in July. You were again late in September, but did not catch up before the account was turned over to a collection agency in December. You made no more payments on the account and it is charged to profit and loss in July of the following year.
Under the FCRA, each of the January and May late payments can be reported for seven years. The collection activity and the charge to profit and loss can be reported for seven years from the date of the September payment, which was the delinquency that occurred immediately before those activities.
However there are exceptions to this seven years reporting act. There is no time limit in cases of bankruptcy, criminal conviction, student loan, information on a lawsuit or unpaid judgment and in case of credit information in response to a job application.
But even after knowing the pros and cons of maintaining a good credit report we tend to get into debts. You may have debt problems for illness, education and your home loans or even for careless spending. But whatever the reason one should strive to get free from it. It is not an impossible task at all. These days debt consolidation is undoubtedly the best way to get you free from debts.
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