Building a Better Credit Report (Part 3)
How long can negative information stay on my credit report?
A credit reporting company can report most accurate negative information for 7 years and bankruptcy information for 10 years. There is no time limit on reporting information about criminal convictions, information reported in response to your application for a job that pays more than $75,000 a year, and information reported because you've applied for more than $150,000 worth of credit or life insurance. Information about a lawsuit or an unpaid judgment against you can be reported for 7 years or until the statute of limitations runs out, whichever is longer. The standard method for calculating the 7-year reporting period starts with the date that the event took place.
How can my credit report affect my job application?
When you apply for a job, employers look at the application you complete and the resume you prepare. Some employers also check into your background before they hire you. Depending on the employer and the job, that background information might include your employment history, your driving record, your criminal records, and your credit report. An employer must get your permission before asking for a report about you from a credit reporting company or any other company that provides background information. If you don't give your OK, your application for employment may not get a second look. That's up to you. But if you don't get the job because of information in your report, the employer has some legal obligations: First, the employer must show you the report; second, the employer must tell you how to get your own copy. The report is free if you ask for it within 60 days of learning the bad news.
What is a credit freeze?
A credit freeze, also known as a security freeze, lets you restrict access to your credit report, which in turn makes it more difficult for identity thieves to open new accounts in your name. That's because most creditors need to look at your credit report before approving a new account. If they can't see your file, they may not extend the credit.
You may want to place a credit freeze on your credit reports if you're concerned about the potential consequences of data breaches. To place a freeze on your credit reports, contact each of the nationwide credit reporting companies. You'll need to supply your name, address, date of birth, Social Security number, and other personal information. Fees vary based on where you live; they commonly range from $5 to $10. A credit freeze does not
- Affect your credit score
- Prevent you from getting your free annual credit report
- Keep you from opening a new account, applying for a job, renting an apartment, or buying insurance—If you're doing any of these, you'll need to lift the freeze temporarily, either for a specific time or for a specific party, say, a potential landlord or employer. The cost and lead times to lift a freeze vary, so it's best to check with the credit reporting company in advance.
- Prevent a thief from incurring charges on your existing accounts—You still need to monitor all bank, credit card, and insurance statements for fraudulent transactions.
U.S. Federal Trade Commission. (2014). Building a better credit report. Retrieved January 10, 2019, from https://www.consumer.ftc.gov/