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Steve Bucci, the Bankrate.com Debt AdviserBounced check slaps you for 7 years

Dear Debt Adviser,
I bounced some checks in 2001, paid them in full after they went to the district attorney, and now I am finding it is showing up as a criminal conviction on "consumer reports" ordered by potential employers, thus preventing me from obtaining employment.

Does this sort of information stay on my report for seven years just like other bad items on my credit report, or will it haunt me for longer?
-- Pablo

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Dear Pablo,
I can see where you are confused. I had to read your question a couple of times before it became clear what is happening here. A "consumer report" is different from a credit report. The latter is usually from one of the three main credit reporting bureaus (Experian, TransUnion and Equifax). They are used by lenders to decide whether to extend loans, and on what terms.

The type of reports you are referring to are "specialty consumer reports." There are many types of agencies doing these specialty consumer reports -- some have medical information, others insurance, or gambling experience in their databases. You have run up against another type: an agency that performs employee background reports.

I can't tell to which one you are referring, but it sounds like your employer, or the reporting agency it hired, ran a criminal background check on you. The bad news is that criminal charges associated with the bounced checks can remain in court records forever.

The good news is that the negative information about your background lasts only seven years. Just as late payments fade with time on ordinary credit reports, they also fall off the specialty reports.

By law, you are allowed to a free copy of the report, if it exists, once per year. Under the Fair Credit Reporting Act, any company that takes adverse action against you -- such as turning you down for a job -- due to information on the report must tell you so. The company must also give you the name, address and phone number of the reporting agency that filed the report. If you haven't done so, you should get that report.

ChoiceTrust, one firm that conducts employee background reports, does a good job of explaining your rights under the Fair Credit Reporting Act.

There are also reporting agencies that specialize in check writing history, and you can check your reports with them, too.

My research tells me that it is exceptionally rare for arrests or convictions to show up on a "regular" credit report. The public record of a judgment from a bounced check would be there for seven years. In case you were wondering (I was), the FICO scoring model rates each type of public record that shows up on your report -- so a bad check, an unpaid tax lien, a court judgment and a bankruptcy are all scored differently.

My recommendation is to be upfront with potential employers and let them know what they will find on your specialty credit report. Explain how you have solved the problem and why it in no way affects how well you will perform, if given an employment opportunity.

Most people don't realize how serious a matter bouncing a check can be. Beyond fees and penalties, if the check is not made good quickly, the payee can take legal action and, ultimately, it can become a criminal matter. If you do bounce a check, contact the bank and the merchant and make good on the check right away.

For those readers who need a refresher course on using checking accounts, and especially for those who may not be familiar with the rules, please review the information below.

Using checking accounts:

Good luck!

To see the agencies that report on whether consumers pay late on their rents, gambling debts, medical bills, and if they bounce checks, see "Specialty consumer reporting agency list."

The Debt Adviser, Steve Bucci, is the president of Money Management International Financial Education Foundation and the author of Credit Repair Kit for Dummies. Visit MMI for additional debt advice or to ask a question of the Debt Adviser, go to the "Ask the Experts" page and select "debt" as the topic.

Bankrate.com's corrections policy-- Posted: Nov. 17, 2006
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