Final Answer:
1) 7 years because negative information is maintained for 7 years to balance lenders' interests with consumers' fair opportunities for credit recovery, as stipulated by the Fair Credit Reporting Act, thus the correct answer is 1) 7.
Step-by-step explanation:
Credit reporting agencies can maintain negative information (excluding bankruptcy) on a person's credit report for a maximum of 7 years. This duration is determined by the Fair Credit Reporting Act (FCRA), a federal law regulating the collection and use of consumer credit information. The 7-year period starts from the date of the first delinquency that led to the negative information, such as late payments or collections.
The rationale behind this time limit is to ensure that individuals are not unfairly burdened by past financial mistakes for an extended period. After the 7-year period, negative information is generally removed from the credit report, allowing individuals the opportunity to rebuild their credit history. It's important to note that bankruptcies, which are more severe financial events, have a longer reporting period, typically up to 10 years.
This regulatory framework aims to strike a balance between protecting lenders' interests by providing relevant credit information and giving consumers a fair chance to recover from financial setbacks without a prolonged impact on their creditworthiness. Regularly monitoring one's credit report and addressing inaccuracies is crucial for maintaining a healthy credit profile.
Thus the correct answer is 1) 7.