What can I do to fix my credit after foreclosure or short sale?

QUESTION: How long does foreclosure have to be reported in a credit report?


ANSWER: The law allows the creditor to report the derogatory item for not longer than 7 Years. The creditor can report this derogatory information for 7 years- but not a day more. The item can deleted prior to that time period referenced IF you can get the creditor to delete it. The credit bureaus will not delete the item for you.


605. Requirements relating to information contained in consumer reports [15 U.S.C. §1681c]

(a) Information excluded from consumer reports. Except as authorized under subsection

(b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:

(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.

(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.

(3) Paid tax liens which, from date of payment, antedate the report by more than seven years.

(4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.

(5) Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.

(c) Running of Reporting Period

(1) In general. The 7-year period referred to in paragraphs (4) and (6) of subsection

(a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.

Please remember the following: It is the creditors who can do the deletion for you!


You don’t have to validate or verify items in your credit report- BUT the creditor DOES need to verify them. The burden of proof is on the creditor and credit bureaus in any dispute!

“Tuesday will be a big day for consumers as they gain important new powers to fix errors found on their credit reports,” Senator Richard Bryan said. “Any consumer who has gone through the process of getting errors on their reports fixed, knows how helpful these new rights will be. Finally, the burden of proof will be on the credit reporting agency, not the consumer, when mistakes are found on credit reports.”



What if the item is mostly accurate but you don’t think the creditor has verifiable proof?


You can begin with a dispute of the item and if the bureaus report back that the account is a “verified” item does it mean the bureau reviewed loan docs with signatures and personally verified the account??? NO- what It means is that somebody over at the creditor got a message from the bureau they then looked up the info in their electronic network and said “yes, this is accurate, or we verify this account”. But you still don’t know if it was verified in fact, since computers and information get mixed up all the time and no one ever pulled the file from cold storage…

If the creditor can’t VERIFY the account, it CANNOT be in your report. (period)

The FTC has a crucial statement in “A Summary of Your Rights Under the Fair Credit Reporting Act”:

” You have the right to dispute incomplete or inaccurate information. If you identify information in your file that is incomplete or inaccurate, and report it to the consumer reporting agency, the agency must investigate unless your dispute is frivolous. See www.ftc.gov/credit for an explanation of dispute procedures.

Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information. Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days. However, a consumer reporting agency may continue to report information it has verified as accurate.”

-From the FTC document, ‘A Summary of Your Rights Under the Fair Credit Reporting Act’ (emphasis added)

So you can challenge the method of verification and the bureaus will delete the item, right?? WRONG. That’s fantasy- not reality. See reality below :-)

In this opinion letter from the FTC we learn that if you are not satisfied with the response of the CRA, because you don’t feel like they researched the account adequately, (and they don’t- due to sheer volume) you can work with the creditor to get resolution and if necessary can sue them for damages.

“Section 623 was added to the FCRA by the Consumer Credit Reporting Reform Act of 1996 (Public Law 104-208, Title II, Subtitle D, Chapter 1, the “CCRRA”). That major overhaul of the FCRA was signed into law on September 30, 1996, and most of its provisions became effective one year later. We understand your point that the obligations imposed by Section 623(a) on furnishers of information to CRAs (and the remedies it provides consumers for violation) are limited, and your view that CRAs should be more vigilant as a result. However, the FCRA imposed no accuracy duties at all on the furnishers of information to CRAs prior to the addition of Section 623 in the CCRRA. Even though the Section is limited in some respects, it imposes legal obligations where none existed before. Section 623(a)(1)(B) forbids furnishers from continuing to report inaccurate information that is disputed by consumers in writing to the address provided by the furnisher (using the procedure you cited). In addition, Section 623(b) imposes clear investigative duties on furnishers when they receive disputes from CRAs, and allows consumers to sue violators of this subsection to obtain damages (which may be punitive if the consumer shows willful violation) and attorney fees. Prior to the addition of Section 623 in 1996, the FCRA provided for none of those duties or liabilities on furnishers of information to CRAs.”

-Excerpt from a letter the FTC sent to Mr. Watkins, dated June 24th, 1999. (emphasis added)