Negative information on your credit report can make a big impact on your financial well-being. It can disqualify you from obtaining home mortgages and car loans, cause your interest rates to soar and may even keep you from getting the job you want. It goes without saying that you would want any negative information removed from your credit report as soon as the time limit for that debt has been reached.
So, what is that limit and how long will negative info remain on your credit report? It is important to be familiar with the two important time lines for debt—the statute of limitations and the credit reporting time limit.
The statute of limitations is the limited amount of time creditors or debt collectors have to file a lawsuit to collect a debt. It is what protects you from being sued for an old debt. The time period varies from state to state. In the state of Florida, the statute of limitations is 4 years on oral contracts and 5 years on written contracts. The clock typically starts ticking after the first missed payment to the original creditor. However, be aware that the limitations period can “restart” if you make a payment toward a debt. Debt collectors will often harangue debtors into making even a $5 payment toward a delinquent account in order to re-age the debt and add another 5 years to the limitations period!