We recently received the following question from a Minter via Facebook.
It’s about the legality of reporting items to the credit bureaus after they had been removed.
Here’s the question:
“I recently had an item deleted from my credit report after I disputed it. About a week later I received a letter from the collection agency billing me for the supposed debt. If I do not pay it can it be put back on my credit report after it has already been deleted?”
The answer to her question is “it depends.”
It depends on why it was deleted from your credit report initially. There are only a small number of reasons why an item is deleted from your credit reports.
It’s Too Old To Report
Most derogatory items much be removed from your credit reports after 7 years has passed. There are some exceptions to that rule though.
Bankruptcies, liens and unpaid student loans can remain longer than 7 years. But, you asked about a collection and collections are capped at 7 years, and no more.
If the item was removed because it is 7 years old then it cannot be reinserted on your credit reports.
That’s called re-aging and it’s illegal. Under NO circumstance can a collection be reported for more than 7 years, legally.
The Item Was Not Verified in a Timely Manner
This is likely what happened in your case.
If you dispute an item from your credit report the credit bureaus have 30 days to complete their investigation pursuant to your dispute.
If you send supplemental information during the first 30 days then you’ve just given them an additional 15 days, but most people don’t do that, so 30 days is it.
If the item cannot be verified within 30 days the credit bureaus must remove it because they are not allowed to maintain information that is unverifiable.
However, and this is the answer to your initial question, if the item is verified on day 31 or any day afterwards, the credit bureau can reinsert the item in your credit reports, legally.
If the item is reinserted then the credit bureaus have to provide you with a notice.
The notice has to be in writing and it must be sent to you within 5 business days after the item has been reinserted.
So, if an item was removed and you never received a notice of reinsertion, then it is not back on your credit reports.
Yes, the credit bureaus and their data furnishers (normally a bank or a collection agency) can make mistakes.
Those mistakes can result in incorrect information on your credit reports.
If you dispute an item, and the lender or collector confirms that it’s not yours, then the credit bureaus will remove it.
So, in your scenario it appears the item can be reinserted on your credit reports. And, it can be reinserted whether you pay it or not.
Reinsertion isn’t contingent on a payment being made or missed.
If you owe the debt, meaning it’s actually yours, then I’d strongly suggest that you talk to the collection agency and make an offer to settle the obligation.
Don’t pay them the full amount because they likely purchased the original defaulted debt for a small fraction of the amount.
Even if you are able to settle the debt for 50%, or less, they’re still going to make a killing so settlements are very attractive to them.
This way you stop the calls and letters and you can move on with your life.
John Ulzheimer is the Credit Expert at CreditSesame.com, and a credit blogger at Mint.com, CreditCardInsider.com and the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. You can follow John on Google+ or Twitter here.