Negative details on your credit report are unfortunate glaring reminders of your past financial mistakes. Or, in some cases, the mistake isn't yours, but a business or credit bureau is to blame for credit report errors. Either way, it’s up to you to work to have unfavorable credit report entries removed from your credit report.
Removing negative information will help you achieve a better credit score. A better credit report is also the key to getting approved for credit cards and loans and to getting good interest rates on the accounts that you’re approved for. To help on your way to better credit, here are some strategies to get negative credit report information removed from your credit report.
Submit a Dispute to the Credit Bureau
The Fair Credit Reporting Act is a Federal law that defines the type of information that can be listed on your credit report and for how long (generally seven years). The FCRA says that you have the right to an accurate credit report and because of that provision, you can dispute errors with the credit bureau.
Credit report disputes are easiest when made online or via mail. To make a dispute online, you must have recently ordered a copy of your credit report. You can submit a dispute with the credit bureau who provided the credit report.
To dispute via mail, write a letter describing the credit report and submit copies of any proof you have. The credit bureau investigates your dispute with the business that provided the information and removes the entry if they find that is indeed an error.
Dispute With the Business That Reported to the Credit Bureau
Now, you can completely bypass the credit bureau and dispute directly with the business that reported the error to the credit bureau, e.g., the credit card issuer, bank, or debt collector. You can make the dispute in writing, and the business is required to do an investigation just like the credit bureau.
When the business determines that there’s indeed an error on your credit report, they must notify all the credit bureaus of that error so your credit reports can be corrected.
Send a Pay for Delete Offer to Your Creditor
You have to approach accurately reported negative information differently. Credit bureaus won’t remove accurate, verifiable information even if you dispute it (because the investigation will verify the accuracy of this information), so you may have to negotiate to have some items removed from your credit report.
Pay for delete offer is a technique you can use with delinquent, or past due, accounts. In pay for delete negotiation, you offer to pay the account in full in exchange for having the negative details removed from your credit report. Some creditors will take you up on the offer.
Make a Goodwill Request for Deletion
With pay for delete, you can use money as the bargaining chip for getting negative information removed from your credit report. If you’ve already paid the account, however, you don’t have much-negotiating power. At this point, you can ask for mercy by requesting a goodwill deletion.
In a letter to the creditor, you might describe why you were late, state how you’ve since been a good paying customer, and ask that the accounts be reported more favorably. Again, creditors don’t have to comply and some won’t. On the other hand, some creditors will make these deletions if you talk to the right person.
Wait Out the Credit Reporting Time Limit
If all else fails, your only choice is to wait for those negative items to fall off your credit report. Fortunately, the law only allows most negative information to be reported for seven years. The exception is bankruptcy, which can be reported for up to 10 years. The other good news is that negative information affects your credit score less as it gets older and as you replace it with positive information. The wait may not be as difficult as you’d think. Consumers can request their own credit report for free every 12 months from the three major reporting agencies. So, to be sure, you should request a report after the aging period to confirm.
It is important to note, however, that while the credit reporting agency will generally delete the negative information from the report after the seven-year aging period, information may still be kept on file and can be released under certain circumstances. Those circumstances include when applying for a job that pays over a certain amount, or applying for a credit line or a life insurance policy worth over a certain amount. Depending on where you live there may be more favorable regulations under state law, such as a shorter statute-of-limitations. You should contact your state's Attorney General's office for more information.
In the meantime, you can improve your credit by making timely payments on accounts you still have open and active.
What Doesn’t Work
Filing bankruptcy doesn’t remove negative information from your credit report immediately. If and when your debts are discharged in bankruptcy, the balances will be reported as $0, but the accounts will remain on your credit report for up to 10 years. Also, accounts that were included in your bankruptcy will be noted as such.
Closing an account won’t eliminate the delinquency reporting. If you close an account with a past due balance, your payment will still be reported as delinquent until you catch up on the payment. The only thing closing an account does is keep you from using it.
Paying a delinquent balance doesn’t erase the negative entry on your credit report. Once you pay the balance, the account status will change to “Current” or “Ok” as long as the account isn’t charged off or in collections. Charge-offs and collection accounts will continue to be reported that way even after you pay the balance.
Frequently Asked Questions (FAQs)
How do you get a free credit report?
Federal law guarantees everyone the right to one free credit report from each of the three national credit bureaus (Equifax, Experian, and TransUnion) every year. These reports can be requested at AnnualCreditReport.com, a website jointly operated by the three credit bureaus.
How long do inquiries stay on your credit report?
A hard credit inquiry can negatively impact your credit score for a few months. Soft inquiries don't negatively impact your score.
How do you remove closed accounts from your credit report?
You can ask a credit bureau to remove a closed account from your report, but bureaus are only required to remove closed accounts when they're outdated or inaccurate. That means, if a credit bureau won't remove it, you may have to wait years for the account to drop off your report.
How do you freeze your credit?
You must request a credit freeze with each of the three credit bureaus individually. These freezes can be initiated online, but be prepared to offer information like your Social Security number and an image of your driver's license.