Derogatory Credit information on your credit file

Generally speaking...derogatory credit information will remain on your credit report for 7 years. The only real exceptions to this is for public records (such as judgments) and bankruptcies which will reflect on your credit reports for up to 10 years.

That is not to say that a 30 day or 60 day late will negatively effect you for 7 years. Creditors now rely very heavily on credit scores (discussed later in a different thread), and those 30/60 day late records will effect your scores less and less as time goes on. Most of your credit tradelines will show a 24 month payment history (you can read the "reading your credit report" thread - once posted for more information) on the report and once your late payment is aged a bit, the late payment will have less and less of an effect on your credit score.

One way that some credit items remain on your credit report for longer periods of time is if the account is in a Profit and Loss status or a charged off account. In many cases, the original creditor will report the account as being delinquent and once the account is sold to a collection agency, they will also report it to the credit bureaus. The fact is that this one account can ultimately end up being sold/transferred to many collection agencies over a period of time.

It is essential, not only with all the identity theft going on, to check your credit file from the 3 major credit bureaus each year. By getting a copy of your credit report you can ensure that inaccurate information is not being reported and any old items have been purged from your credit report.

Consumer Credit Questions

Anyone can ask questions by commenting to this post (or one of the others) or you can visit the site forum or email me with questions. I will be adding more catatories of posts as I get more questions so they can be broken down into sections for easier viewing.

I have been answering credit related questions from this site for over 5 years and am just getting around to setting up this blog to essentially keep a record of those questions/answers for others to see.

Texas Home Equity Loans

I thought I would include some specific sections for certain areas which I am very familiar with...

Texas home equity loans or cash out mortgage loans as they are referred to are very unique in the state of Texas. The highlights are as follows:

• The loans are limited to 80% of the appraised value of the home
• A 12 day "cooling off period" is required before the transaction can be closed
• The borrower, or borrowers, must review the HUD-1 settlement statement 24 hours prior to closing the loan
• State law permits only one home equity loan in any 12 month period
• The maximum a borrower can be charged for this type of loan, including all fees is 3% of the loan amount
• Once a customer has taken out a home equity loan on their homestead, each time they refinance that property it is considered a home equity loan (provided, of course, that it is still their homestead property)
  

Those are the basic highlights for Texas home equity loans, there are many more specific and detailed particulars that must be adhered to but those are the essentially most important ones. As Texas differs from any other state regarding home equity loans, homeowners in Texas cannot take advantage of higher loan to value products available in other states (such as 125% equity loans) but this is in place to protect the consumers equity in their homestead property.

The Texas home equity loan laws only apply to the customers primary residence (homestead) and does not apply to any other properties that the customer may own. There are also many additional limitations regarding the type of loans that are permitted and the required amortization of the loans. Just recently, the State of Texas passed legislation allowing home equity lines of credit. These types of loans must still adhere to the 80% rule and all other State laws regarding home equity loans but does give the customer some addtiional flexibility and options.

Any comments and/or questions will be answered directly and on this posting.

Introduction/set up

I have set up this blog to post updates, faq, and answers to credit questions.

If you have a credit question, you may simply email me at david@financial-counseling.com or complete the contact form on the web site and I will respond to you personally. If it is a common question, or can be adjusted to a common question, then I will post a generic form of the quesiton and a response on this site so that others may use that information as well.

Thanks,
David