Consumer shopping bag: Credit scores

Q: Does stuff fall off credit reports with time? How long for a score to become good? What hints do you have to move forward and what should I avoid?— Kim W. and Paul P., Denver

A: Credit scores — and by that I mean the FICO score we're all familiar with, though there are many others — are an interesting animal in that they don't actually exist.

They are not sitting in a file somewhere, ebbing and flowing daily with each financial transaction you make. A FICO score only exists when there's a request for it. At that moment, a score is generated and is a snapshot of your credit history.

Though the snapshot is of the moment, the history goes back much farther — sometimes for 20 years.

The basic timeline for most all adverse credit issues is seven years. Chapter 13 bankruptcies, where you pay back some of your debts in time, are there that long, and pretty much all other debts.

Other than a Chapter 7 bankruptcy that lasts 10 years on your credit report, the longest is a tax debt from the Internal Revenue Service. Those are timeless.

Collection accounts last seven years and six months from the date you first fell behind on the original indebtedness — not when the collection agency took charge of your account.

But as debts get older, they fall away in importance to your credit score. So while a 30-days-late issue can be reported for seven years, in time it is less and less critical to your score.

Here's a tip: You can challenge anything on your report for accuracy or completeness. Challenge long-standing issues long resolved — such as a collected account from four years ago — and often times the collector won't bother responding to the bureau's inquiry. In such case the bureau must remove it from your report.

Paying on time is critical and today 750 is the new 720 for excellent credit. Build a good payment history and the old stuff won't matter so much.

Too, experts say outstanding balances shouldn't be any more than 10 percent of your available credit.

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