New year: Financial Fitness

KS, UNITED STATES

01.10.2020

Story by Gail Parsons 

Fort Riley Public Affairs Office

By Gail Parsons
1st Inf. Div. Post

Editor’s note: This is the first of an eight-part series addressing financial issues — how to avoid and repair credit and debt problems. Check out next week’s edition of the 1st Infantry Division Post for information on how to fix credit.

A person’s credit report contains information that paints a picture of their financial history. This information is used by companies to evaluate applications for loans and insurance, and it can be used by prospective landlords and employers.
While having a strong credit report is important, life happens and financial difficulties can cause a score to plummet. Solving credit problems can take time, but there are laws to protect the consumer against unfair debt collection practices and help them turn their financial history around.
According to information from the Federal Trade Commission, the laws require “businesses to give all consumers a fair and equal opportunity to get credit and resolve disputes over credit errors.”
One of the rights people have is that a negative account cannot be held against them for more than seven years, said Paul W. Depusoir, personal finance manager, Army Community Service.
“Once it gets to seven years, then it is deleted from the credit profile,” he said. “If it's deleted from the credit profile that will be as if it never happened.”
For example, he said if a person has an account on which they never made a payment, seven years from the day it went delinquent it is deleted from their credit report.
“[We’re] not telling them they should leave it alone and never pay that,” he said. “But sometimes you run into a situation where the account has been delinquent for … six years and nine months and now we're at the point where there are only three months left before it has met the credit time limit to be removed.”
What many people don’t realize, he said, is that if they make contact with the collection agency and set up a payment plan — that seven-year time period starts over.
He said it is also important to remember that although a delinquent account was erased from the credit report, the eraser doesn’t touch the records held at the business where the account was originally held.
“Let’s say that credit was with … Bank of America,” Depusoir said. “Bank of America would still have … in their records that this person had an account with them that was delinquent and they never paid. So, Bank of America would likely still have that and deny them credit if they're applying strictly to Bank of America.
Having a delinquency removed from the credit report is different than a person’s legal responsibility to pay, which is tied to the statute of limitations and is going to be different in each state. In Kansas, the legal obligation is five years, he said.
“The statute of limitations will always already have expired even before we get to that point,” Depusoir said. “That means they would no longer be able to take them to court because the statute of limitations already expired — but it will still show up in their credit profile for another two years and have an effect on what a credit score looks like.”
When a person does apply for credit, the Equal Credit Opportunity Act prohibits businesses from denying their application because of a person’s sex, race, marital status, religion, national origin, age or receipt of public assistance. According to the FTC, the companies can ask for that information, with the exception of religion, but they cannot use it to deny an application.
The ECOA also states a consumer has the right to know why they were denied credit.
For more information about consumer rights, go to https://www.consumer.ftc.gov or visit with Depusoir at ACS.

• Date Taken: 01.10.2020
• Date Posted: 01.14.2020 18:02
• Story ID: 359195
• Location: KS, US