Your credit report is a summary of your financial well-being. It reflects if you have any debts, whether or not you are paying your bills on time, if you have impending loans or are applying for several types of loans at the same time and other quintessential facts related to your borrowings and repayments. Anyone who pays their bills on time and has no debt whatsoever should not worry about their credit score. Their credit report should be impeccable. However, there are instances when errors can lead to wrong entries on the credit report. Everyone should contest such wrong or factually incorrect entries and have them removed.
Not everything on a credit report is a public record. A public record is basically any information that is available with government agencies or regulatory authorities that can be accessed upon request. For instance, your name and address are public records. However, your age or your social security number is not. Public records on credit report have a bit more nuanced definition. These are essentially any information that pertains to legal issues related to your finances. Any legal liability you have, be it an unpaid debt or an impending repayment of a loan, will be a public record. Credit reporting companies will have access to such records. Government agencies and autonomous institutions including courts are also required to report such public records to the credit bureaus.
Types of Public Records
There are three instances when a development will become a public record on your credit report. The first instance is bankruptcy. If you have filed bankruptcy, which could be personal or for a proprietary business, then that would reflect on the credit report immediately after the court pronounces its judgment. If your company goes bankrupt, that too would reflect on your credit report, unless it is a limited liability corporation or a publicly listed company wherein your personal assets and wealth are completely segregated from the business entity.
The second instance is a tax lien. If you have not paid your taxes, whether you have not filed them or you have not paid some money that is due, such liens will appear on your credit report as public record. There may or may not be any intervention by a court. Such liens feature anyway. If a court gets involved and you are held liable to pay the tax lien, then such record will reflect on the credit report.
The third instance when you would have a public record on the credit report is when you have been sued by someone or an entity and you have lost the case in a small claims court. This can be the fallout of any type of financial dispute. You could be sued by your landlord. You may have a financial dispute with someone you had borrowed money from. Your car may have been involved in an accident and you may not have paid for damages.
Not every financial dispute becomes a public record. If you settle a dispute with someone before they file a case or takes you to court, then there is no judgment in your favor or against. Hence, there is no public record to report to the credit bureaus. Any other financial problem that does not involve the court will not get featured on the report. For instance, you may have a divorce, you may have some personal financial liabilities or some impending payments that are not being documented and reported by any company. Such details will not make their way to the public records on your credit report.
Misconception about Public Records
Court judgments, bankruptcy and tax lien are the three types of public records that feature on a credit report. Income tax, welfare or benefits, education or employment details, healthcare details or other financial information do not become a part of public records. Even if a court judgment involves some of these aspects, only the amount of money you have been asked to pay to the person or entity who won the case will get reported to the credit bureaus or agencies.
Public records work in the same manner as debt collection agencies report to credit bureaus. Whenever you don’t pay something on time and when the creditor or lender refers your account to a debt collector, the same gets reported to credit bureaus. Hence, if you have a foreclosure, it would get reported. The intervention of a court, bankruptcy and lien are similar. They are about money you owe and hence a form of debt. Such debts get reported and listed as public record.
Facts about Public Records
Public records will stay on your credit report for seven years. If the debts are unpaid, then they can stay for ten years. This rule varies from state to state but seven years is the standard. Whenever a public record appears on your credit report, your credit score will take a hit. It may reduce by fifty points. If the debt is phenomenal, then the credit score can reduce by hundreds of points. The review of your credit score depends entirely on the amount of money you owe and whether or not you have paid it.
Any debt that is paid will have a reduced impact on the credit score. Also, older debts that are paid would have a substantially reduced impact. In five to seven years, older debts will have very little or no impact on the credit score but you must have maintained an impeccable record of repaying loans including timely credit card payments over the same period of time.
How to Remove a Public Record from your Credit Report
The first step is obviously to avoid having any debt, lien, bankruptcy or foreclosure. If you do have a financial dispute that gets the court involved, you should try and settle it before you lose the case. Do not wait for a court judgment if you know you have to pay some money. Pay it before you get sued or before the court considers the merits of the allegations. You can avoid a public record this way. There is not much you can do about bankruptcy or foreclosure. Tax lien is also something that you cannot change in hindsight. Legal disputes pertaining to financial matters are what you can respond to and you should.
One way to remove public records on your credit report is to look for errors in the entry. It is possible that a record will show a debt as outstanding and not paid. You may have paid the debt. This could be a fine levied by the court. This may be a sum of money you had to pay to an individual or organization as warranted in the court judgment. Your public record should have authentic information. If a debt is paid, it should be stated as paid. You can always get the credit bureaus involved, write to the court or hire a credit repair company to fix this. You can also use the debt collector or the agency that was involved in the particular case to report the accurate information so your public record is rectified.
Older public records will fall off your credit report automatically. Credit bureaus don’t look farther than seven years in the past. Banks and other lenders are also more concerned about red flags in the recent years or months. However, it is quite possible your credit score remains low as a result of a public record that has fallen off your report. You should report this to the credit bureaus and have your credit score reviewed.
Some public records cannot be removed. Bankruptcy will remain on your credit report for seven years in most cases and ten years in some states. If you do not attend to some liabilities as instructed by the court following your bankruptcy, then these would reflect on your credit report. You should look for accuracy while studying public records. You want paid debts to appear as paid and unpaid debts will appear accordingly. You cannot remove unpaid debts. Tax liens too will remain on your credit report, even if you have paid them. Make sure they are listed as paid.
You can remove a judgment which is a public record on your credit report. You can hire a credit repair company or you can try to do this on your own. Once you pay a debt as instructed by a court in its judgment, the public record on your credit report will appear as paid. This will positively affect your credit score but the review would not be consequential. Banks and lenders would still consider it as a red flag, especially if it was a fairly recent incident.
One way you can remove public records, in case of a court judgment against you, from your credit report is by getting in touch with the debt collector or debt collection agency that was appointed to recover the money you owe to the plaintiff or claimant in the case. The court will report the developments according to the provisions laid out in the Fair Credit Reporting Act. The Section 609 or US code 1681 requires debt collectors to validate a debt so they know for certain that the individual they are pursuing is actually the person who owes the money. No debt collector can pursue an individual without proving that the debt is valid.
You can write to this debt collector or agency to validate the debt. You can send a letter and it is likely you would be asked to provide more information. In cases where courts are involved, things can get a little complicated as the debt collector will have to refer to the judgment and accompanying documents. It is possible you would have to write more than two or three letters but eventually you will be provided the information you are looking for, wherein you would be confirmed as the individual who owed the money and had actually paid it. Since the debt is paid and it is no longer outstanding for the claimant, court or the collection agency, it should not be reported as such on the credit report. The debt collection agency would report to the credit bureaus and the public record may be deleted as a result.
Impact of Removing Public Records
Your credit report should have entries that actually reflect the facts. If you have an outstanding debt, it should be reflected on your credit report and your credit score will be reviewed accordingly. If you don’t have an outstanding debt, then ideally it should not be on your credit report. Some paid debts will always be on the report as public records but not all. Legal disputes wherein you owe some money are not a conventional loan. It is a judgment that has gone against you and you are anyway required by law to pay the money on the scheduled date. You cannot really dillydally with the judgment as you would be held in contempt of court.
Public records should not be presented unfairly on the credit report. This is where credit repair companies come into play. They can help people to get such records deleted or removed. You can fight this battle alone but it may take eight months to a year. Courts don’t respond promptly. Most courts have an auto response. There would not be any investigation till you send the second or third letter. The debt collector may not be able to steadfastly work with the court and other public records departments where from your details must be obtained. All such problems can prolong the process.
Removing public records from your credit report would have an instant effect on the score. Your credit score may increase substantially but it may not be back at the level where it was before you had the judgment against you. This will take some time.
Editor at CreditRepairExpert
Steven is a Certified Financial Planner (CFP) and Certified Credit Counselor (CCC) and joined CreditRepairExpert in June 2016 as a Credit Repair Adviser to continue his mission of making a difference in the world. Everyday, Steven speaks with individuals and families in the online credit repair community to answers questions and offer help people on their journey to repair their credit rating. If you have a story idea for Steven or you would like help with credit repair, please email him at firstname.lastname@example.org.