When running a background report, the Fair Credit Reporting Act is the federal law that regulates how long a CRA (Consumer Reporting Agency) can report information for.
There are various answers on this question.
According to Experian, “Chapter 13 bankruptcy is deleted seven years from the filing date because it requires at least a partial repayment of the debts you owe. Chapter 7 bankruptcy is deleted 10 years from the filing date because none of the debt is repaid.”
Experian is one of the three major credit bureaus and can be viewed as an authority on subject matter…
… however, this is Experian’s policy for their consumer credit reports. Experian is a “furnisher of information” and the law that decides how long information is reportable for on a consumer report.
The true answer is that a CRA can legally report bankruptcies for 10 years.
The excerpt above is from page 22 of the FCRA which is the Fair Credit Reporting Act.
Why Does Experian Report Bankruptcies 7 – 10 Years?
Here’s an excerpt from the FTC that provides a summary of your rights under the FCRA.
Experian can decide to not report chapter 13 bankruptcies beyond seven years.
However, the FCRA is laid out in this 108 page document and there are zero mentions of Chapter 13 bankruptcies or Chapter 7 bankruptcies in the the 108 pages.
If you read the first sentence of the FCRA document it states, “As a public service, the staff of the Federal Trade Commission (FTC) has prepared the following complete text of the Fair Credit Reporting Act.”
Experian is a publicly traded business and not a Government agency.
The FTC is explained by Wikipedia in this manner, “The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act.”
The FCRA is the authority of how consumer reporting agencies should be reporting data. The FTC enforces the FCRA and has laid out clearly that 10 years is how long a bankruptcy is reportable for.
Why Do Many CRA’s Say 7 – 10 Years?
Many Consumer Reporting Agencies will plug into Experian’s data to provide background checks. If you call and ask that service how long a bankruptcy is reportable for they will provide what Experian provides them.
Therefore, Experian becomes an authority as they’re the data furnisher and they decide to not report some bankruptcies beyond seven years.
The FCRA is the authority and says 10 years but Experian is the furnisher of information that influences many CRAs.
It’s important you understand the rules and regulations of the FCRA and not the rules laid out by a bureau.