What is a Public Record on a Credit Report?
Michelle Wilson - July 1, 2022
Your credit report public record is the section within a credit report that states all public records. These documents are all entries received with the local, county, state, or federal court. A creditor may take legal action against you when severe delinquency occurs on the account. Should the court find in favor of the creditor, the action will become a matter of public record, or in certain situations, the action will show up on your credit report.
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Which Public Records Will Appear on a Credit Report?
A public record that might appear on your credit report includes any judgment, tax lien, or bankruptcy on your file. In some states, these entries are the worst type of documents to appear within the credit report as they highlight significant delinquency on the file. Since 2017, only bankruptcies can appear on your credit report.
Credit Reporting Time Limitations for Public Records
Most states allow a bankruptcy record to remain on the credit report for seven to ten years. A Chapter 7 bankruptcy can stay on your record for up to ten years. Foreclosure is another reportable record, staying on your credit report for seven years.
Removing Public Records from Your Credit Report
When a public record is noted on your credit report in error, individuals can use the credit report dispute process to have it removed. All users have the right to dispute an error with the court that provided the entry should a credit bureau not clear the error.
Any record that is accurate and reporting within the specified times above will not have the record removed from the credit report.
How to Improve Your Credit After a Public Record Appears
Although a public record will severely damage your credit score, it’s not the end of the world. Most of the damage occurs when it is first placed on your credit report, especially if you have other delinquent accounts showing. As the record gets older, the impact becomes less on the credit score. Make sure you continue to pay all other accounts on time and keep your debt levels low to reduce the impact on your credit score.
If you’re trying to improve your score with a public record on your report, here are a few things that can help:
Always Pay Your Credit Card Balances Strategically
The credit utilization ratio is the portion of any credit limits you’re using. This ratio is calculated by the amount of credit used divided by the total amount of credit available. Recent studies suggest that individuals with the highest credit scores will use less than 7% of their total balance. Using less than 30% of your limit on any card is always a good idea, although lower is better.
Make sure your balance is low for the monthly reporting to credit bureaus. The credit utilization ratio is highly influential when determining your credit score, meaning the lower the balance, the better you’ll appear to the reporting agencies.
Try Asking for Higher Credit Limits
If your credit limit increases and the balance stays the same, your utilization ratio automatically decreases, improving your credit. Should your income go up or you’ve added longer periods of positive credit experience, there’s a decent chance of receiving a higher limit. This method works quickly and doesn’t require extended periods to increase the credit score. Always ask your current creditors if there’s a way to increase the credit score without performing a hard check on the file.
Pay Your Bills on Time
This method isn’t so much a strategy as it is good housekeeping. Make sure you pay your bills in full monthly to avoid any negative influence on the file. Every month that sits delinquent is going to impact your score negatively. If you’ve missed a payment by more than 30 days, contact your creditor and ask if they can temporarily stop reporting the account to the bureau.
Your record of paying all bills on time is the single most significant scoring factor in both systems. Making sure the minimum balances are paid on time is paramount to improving your score after a public record.
Always Dispute Credit Report Errors
A singular mistake on your credit report could be drastically pulling down your score. Take the time to review your credit history and always dispute anything that isn’t reporting correctly. You’re allowed one free report from each credit bureau annually, which is the perfect opportunity to review the information and dispute anything that doesn’t match your records. For example, any late payments on your credit report that you paid on time could indicate someone else’s credit activity reporting on your file. Once you’ve identified all errors, report them to each agency individually.
Promptly Deal with Collection Accounts
Paying off all collection accounts will remove the threat of being sued by the creditor, and you may also negotiate with an agency to stop reporting the debt once you pay it. If these accounts aren’t accurate or are too old to remain listed on the file, you can promptly have them removed. When contacting the collection agency, always ask for any settlement terms (including removal from the credit bureau) to be in writing.
Get Credit for Your Rent and Utility Payments
Most rent reporting services can choose to add any on-time rent payments to a credit report if requested. While rent payments aren’t considered equally by all scoring models, some will use it to boost a score. Thankfully, regularly paying your rent and utilities every month doesn’t require an extreme time commitment from you but still shows other lenders you’re responsible with your money.
Become an Authorized User
If you have a friend or family member that holds good history and a decent credit limit, ask to be an authorized user on the account. This account will add the profile to your records, which will improve the credit utilization ratio. It also benefits the authorized user status thanks to the primary user’s positive payment history. If using this method, ensure the credit card reports to all three major credit reporting bureaus. Make sure that anyone authorizing you as a user understands the impact it may have on your future score, especially if the account turns delinquent.
While no one likes the thought of a public record appearing on their report, it’s an unfortunate aspect of those individuals struggling with finances. These public records will negatively impact your chances of opening new credit but eventually lessen over time. Always ensure that anything reported on your credit report is accurate, reporting any discrepancies to the credit bureaus as soon as possible. By taking steps to improve your credit, you’ll find the public records are less impactful on the report over time, especially if it’s the only blemish reporting after a few years. Many people with tax liens, judgments, and bankruptcies can secure new credit and build their score over time.