We’ve outlined how to remove negative items from your credit report, the paid services you can opt to use, and additional information to have on hand.
It is important to clarify that only incorrect items can be removed. Although accurate items cannot be removed by you or anyone else, there are still many credit report errors that can damage your score, and these are worth looking out for.
How To Remove Negative Items From Credit Report Yourself
1. Dispute the Information With The Credit Bureau
Initiate a claim directly with the credit bureau by writing a dispute letter. The purpose of this letter is to inform them of what information you believe is inaccurate.
The Fair Credit Reporting Act (FRCA) requires creditors to report accurate information about every account. This means they have a legal obligation to review your claim, investigate and respond. This process will be free of cost and can take up to 30 days to complete.
You can begin a dispute with any one of the credit bureaus through their websites or via mail. The leading credit reporting agencies are Equifax, Transunion, and Experian. It’s important to have documentation and to be precise about the information you are challenging.
After receiving the initial claim, the credit bureau will contact the source of the erroneous information and dispute it on your behalf.
Each of the three major credit bureaus has an online section dedicated to walking consumers through the process of disputing a claim online. You must dispute the entry with each of the credit bureaus to make sure the removal is complete across the board.
How to file a dispute letter:
- Write a letter to any one of the credit bureaus. The Federal Trade Commission offers a free sample letter consumers can use as a reference.
- Give specific, detailed descriptions of each item in question.
- Explain thoroughly why that item is incorrect and clearly state that you want it removed or corrected.
- Be sure to enclose copies of every document that supports your claim (but keep the originals!)
- Mail the letter by certified mail with the return receipt requested. This will certify that the credit reporting agency received the letter, and you will receive a signature as evidence.
- Keep the certified mail signature, along with copies of your letter and any enclosed documents.
2. Initiate a Dispute Directly With the Reporting Business
Reporting business includes credit card issuers and banks. Upon receiving a dispute, they are also required by law to investigate and respond. If the reporting business corrects the issue, you saved yourself the step of contacting the credit reporting agency. It is important to make sure the items are cleaned up for all three credit bureaus mentioned above.
Trying to work out your debt directly with the lender will not change the amount of time said negative item will remain on your credit report. The seven-year retention period starts counting on the date the account was first reported past due or unpaid and does not change if you initiate negotiations to pay down the debt.
3. Hire A Professional Credit Repair Service
When looking at the lifetime cost of bad credit, or if your report is riddled with inaccuracies that further complicate the repair process, paying $100 a month for a reputable company like Credit Saint may be a viable solution if you can afford it. Credit repair services can help you with the following items:
- Cleaning up credit report errors
- Disputing inaccurate negative entries
- Handling creditor negotiations
If you decide to hire a credit repair service, know that there are laws governing how they operate and what they can do. The Credit Repair Organizations Act (CROA) establishes the following regulations governing credit repair services:
- They cannot provide false or misleading information concerning a person’s credit status and identification.
- They must provide a detailed description of the service to be provided.
- They cannot receive payment for the performance of any service until said service has been fully performed.
- There must be a written contract detailing the services to be performed, the time-frame during which these services will be performed, and the total cost for those services.
- They cannot promise to remove accurate information from a credit report prior to the term set by law (seven years, ten years for some bankruptcies).
- The consumer will have three days in which to review the contract and cancel without penalty.
Credit repair companies provide a useful service, but it is crucial to understand what they can and cannot do. Any company that promises to remove accurate negative items is most likely scamming you or engaging in illegal practices that will come back to haunt you. Have realistic expectations, make sure the credit repair company is reputable, and avoid paying high fees before any work has been done.
4. Pay For Delete
Consider this option for accurate items that cannot be contested with the credit reporting agency. Requesting pay-for-delete means that the debtor offers to pay the debt (partly or in full), and in exchange, the collector or original creditor agrees to delete the account from the credit report. This strategy is usually employed when debts have already been sold to a debt collection agency.
Creditors want to get back as much money as possible, so committing to paying is enough of an incentive for the collection agency to remove the negative entry from your credit report. However, pay-for-delete is not a dependable solution. After all, it is a request, and the collection agency has all the right to reject the petition. Furthermore, it falls into a legal gray area because debt collectors must legally report accurate information to the credit reporting agencies.
Bear in mind that the account won’t be completely removed from the credit report. Pay-for-delete may remove the account in collection, but the negative item from the original creditor (say, non-payment of a loan or credit card), will still appear.
Investing time and energy in a pay-for-delete request may not even be necessary. The latest credit scoring models (FICO 9 and Vantage score 3.0) don’t consider paid collection accounts when calculating your score. This means that once you pay a collection account in full, it will not weigh down your score even if it still lingers on the actual credit report.
Consumers may be better off just paying off the debt, avoiding an additional negotiating process that is not guaranteed to succeed.
5. Write a Goodwill Letter
Like pay-for-delete, writing a goodwill letter seems like a long shot, but it’s an option for borrowers who want to exhaust every possible alternative. Write to the creditor and ask for a “Goodwill Deletion.” If you have taken appropriate steps to pay down your debts and have become a more responsible borrower, you might be able to convince the creditor to remove your mistake.
There is no guarantee that your plea will get a response, but it does get results for some. This strategy is most successful for one-off problems, such as a single missing payment, but it may be futile for borrowers with a history of missed payments and credit mismanagement.
When writing the letter:
- Assume responsibility for the issue that caused the account to be reported to begin with
- Explain why the account was not paid
- If you can, point out good payment history prior to the incident
6. Get Credit Counseling
Suppose you decide you need help disputing inaccurate information on your credit report and don’t have the resources to hire professional help. In that case, there are several non-profit credit counseling organizations like the National Foundation for Credit Counseling (NFCC). The NFCC can provide debt counseling services, help review your credit reports, work with lenders, and help create a debt management plan free of charge.
As always, be wary of predatory credit organizations or companies. Make sure to find a reputable counseling agency and keep a look out for any red flags, like hidden fees or lack of transparency.
When looking for a credit counselor, the Federal Trade Commission advises consumers to check out each potential agency with:
- The Attorney General of your state
- Local consumer protection agencies
- The United States Trustee program
7. Get A Free Copy Of the Credit Report
Monitoring your credit report is a necessary practice to keep in check any negative information. Consumers should obtain their free credit report and review the report at least once a year to catch any irregularities in a timely manner and keep track of items that you are currently disputing.
Consumers are entitled by law to a free annual credit report from each of the three main reporting bureaus: Equifax, Experian, and TransUnion, and you can access all three of them through one single website:
AnnualCreditReport.com is the only authorized website through which you can gain free access to your credit report from the three major bureaus. Be wary of other sites that promise the same, as they may have hidden fees, try to sell something, or collect personal information.
|Online at AnnualCreditReport.com|
|Phone: (877) 322-8228|
|Mail: Download, print and complete the request form and mail to:|
|Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Credit reports are also available through each of the major reporting agencies themselves. If consumers sign up for one of these companies’ monitoring services, the membership includes unlimited access to your report, amongst other benefits.
Experian offers a free 30-day trial period before charging you $21.95 a month for the monitoring service. With that fee, you get identity-theft protections, fraud-resolution services, and credit score monitoring, which helps you be aware of any issue where you might need to clean up your credit report.
Equifax made headlines in 2017 due to a massive data breach, but it still remains one of the top 3 services to get your credit report. The company provides a few different levels of service if you want to monitor your credit score monthly (as opposed to getting a free, yearly report). Monitoring packages start at $14.95 per month, and the $19.95 per month options (there are two) include, ironically, a host of identity-theft protection options.
For $24.95 a month, TransUnion will monitor your credit scores from all three reporting bureaus in real-time, alert you if someone applies for credit using your name, and features personalized debt coaching services.
Avoid The Following Strategies
Closing a line of credit that is already behind on payments.
This does nothing to remove the debt and can lower your score, as it will increase the debt-to-credit ratio.
Filing for bankruptcy
Bankruptcy should only be considered if the burden of debt becomes untenable. It should not be used as a tool to clear your credit because the impact of bankruptcy on a credit report is drastic. It will hurt credit score by up to 200 points or more and will also linger on your credit report for seven to ten years.
COVID-19 and Credit Repair: What You Should Know
Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, consumers can find debt and credit relief measures. Unfortunately, original creditors and debt collectors can still report negative items. But lenders have put accommodations in place for consumers to avoid falling behind on payments in the first place. These include:
- Payment plans
- Mortgage forbearance
- Deferred payments
- Loan modifications
- Reduction of interest rates
- Loan extensions
- Waiving late fees
If borrowers take advantage of most of these accommodations, creditors must keep reporting your accounts as current.
Given the skyrocketing unemployment rates caused by the pandemic, it is important to note that filing for unemployment will not show up your credit report nor affect the score.
Until April 20, 2021, Experian, Equifax, and Transunion will offer free weekly credit reports through AnnualCreditReport.com. Having regular access to credit reports will help consumers monitor and protect their finances during the pandemic.
Negative Credit Report Entries That Impact Your Score The Most
Should these items be accurate, they will stay on the credit report for a determined period. Fortunately, their impact will also diminish as time passes by, even if they are still listed on the report. For example, a collection that is from a few years ago will bear less weight than a collection just recently reported. If no new negative items are added to the report, your credit score can still slowly improve.
Multiple hard inquiries
Multiple hard inquiries over a short amount of time are a red flag for lenders, as it tells them that you are applying for credit too often and potentially, being denied.
Payment history accounts for a large chunk of your credit score, so if you are chronically late due or not paying at all, it will hurt your score significantly. It also signals lenders that you cannot afford or are unwilling to pay your debts.
In some cases, a creditor might wait two months before reporting delinquency, but according to Equifax, a single payment that is past due by 30 days can cause a point drop. Reported delinquencies stay on the record for 7 years.
A foreclosure is another red mark on your credit that can cause a credit score to drop substantially. FICO reports that a credit score can see up to a 100 point drop from a foreclosure, depending on the consumer’s starting score. Foreclosures will stay on the record for 7 years.
A charge-off happens when the original creditor has given up on you ever paying your debt and they “charge off” your account. This could cause a credit score drop of 100 points or more in some cases. Charge-offs stay on the record for 7 years.
If your car is repossessed, the credit bureaus may include a note about the repossession in your credit reports that stays for up to seven years. A repo can include many of the negative line items you see here, such as late or non-payment, so the score drop can easily go over 100 points.
A judgment comes when a court is forced to get involved to ensure debt repayment. Credit score impacts can vary but the drop could also be over 100 points. Judgments stay on record for 7 years.
A collection occurs when the original creditor resorts to hiring an outside firm to collect payment. Collections fall under payment history, so the hit to your credit score can also be over 100 points.
Collections stay on record for 7 years.
What Makes Up Your Credit Score?
There are multiple credit score models available, and each scoring model has its private metrics and criteria. This means that your credit score may vary according to which model is used, but this should not be by much. Regardless of the model used, they all share the same purpose: to analyze credit reports and numerically measure whether a borrower can be trusted to pay their debts in time.
VantageScore and FICO scores are the ones consumers should pay the most attention to. Although they are separate scoring models, they still use the same source material: the credit reports generated by the three major credit reporting agencies.
The Fair Isaac Corporation created FICO scores, and it’s an industry standard used by most lenders. In a FICO score, there are five categories awarded different degrees of importance. The most important component is your payment history, while the least important are the new credit and credit mix. However, changes to any one of these categories can still affect your score.
- Payment history (35%)
- Amounts owed (30%)
- Credit history length (15%)
- Credit mix (10%): Installment loans (auto, mortgage, loans), and Revolving credit (credit cards)
- New credit (10%)
Developed by Experian, Transunion, and Equifax, a VantageScore prioritizes each category a bit differently than FICO scores:
- Total credit usage, balance, and available credit: extremely influential
- Credit mix and experience: highly influential
- Payment history: moderately influential
- Age of credit history: less influential
- New accounts: less influential
The following are minor factors that can still keep borrowers from reaching their ideal credit score:
|Short credit history||High credit utilization|
|Despite on-time payments and overall excellent credit usage, if someone has only one or two years of payment history, they may not have a high score simply because there isn’t enough information for the lender to decide whether they are creditworthy.||Your credit score can be negatively impacted if you use up a large amount of your allotted credit. It is generally recommended to only use around 30% of your allowed credit.|
Take the following example:
|3 credit cards||3 credit cards|
|$30,000 total credit limit||$30,000 total credit limit|
|$5,000 debt||$25,000 debt|
The person with a $5,000 debt will have a higher credit score than the other who has $25,000 in debt, simply because they are using a moderate amount of available credit.
What’s Included In Your Credit Report?
- Social security number
- Date of birth
- Employment information
- Types of accounts
- Payment history
- Opening date of accounts
- Credit limit or loan amount
- Account balances
- Hard inquiries
- Soft inquiries
- Identifies which items in your credit history are hurting your score
- Filing date and chapter (type of bankruptcy)
- Credit accounts
- Accounts with doctors, hospitals, banks, retail stores, cable companies, or mobile phone providers.
Impact Of Bankruptcy On Your Credit Report
Bankruptcy is a legal process that can stay on your credit report for up to 10 years. It will be listed as a public record, and it can show up even after your debts are discharged and the bankruptcy process is completed.
There are two categories of bankruptcy for individuals:
- Chapter 7 stays on your credit report for 10 years because the debt will remain unpaid.
- Chapter 13 requires partial repayment, so it stays on your credit report for 7 years
Individual accounts included in the bankruptcy settlement stay on for 7 years, starting from the date each account was initially declared delinquent. That date does not change, regardless of the bankruptcy filing date.
Even though a bankruptcy can stay on your credit reports for up to a decade, its effect on your credit can diminish over time before actually dropping off your reports.
Impact Of Identity Theft On Your Credit Report
Identity theft occurs when someone steals your personal information, which can then be used to apply for new lines of credit. If these new accounts go into default, they will show up on your credit report and hurt your score. Identity theft often results in immediate financial loss, long term credit damage, and extreme stress.
Personal information is now easily attainable on the internet, and there are many ways identity can be stolen online and offline:
- Data breaches
- Credit card theft
- Browsing an unsecured website
- Malicious software
- Mail theft
- Phishing scams through email
- Credit card skimming
Cleaning up your credit after identity theft can take anywhere from a day to several months or even years. The longer it takes for you to realize your identity has been stolen, the more difficult it will be to undo the damage. Monitoring your credit report will help you to stay on top of potential fraudulent charges.
Steps To Recover Your Credit After Identity Theft
- Freeze credit
A credit freeze restricts access to your credit report. Credit reporting agencies can freeze your credit, effectively restricting anyone from opening new credit lines.
Existing creditors or debt collectors can still view the report, but not new creditors. Government agencies may have access, too, if mandated by court order, subpoena, or search warrant.
- Place a fraud alert
Victims of identity theft can notify one of the three major bureaus, which will then put a fraud alert on your report and notify the other bureaus to do the same.
This alert will stay on your report for more than a year, and any lender that views your report will see that you were a victim of fraud. Lenders will be more cautious and take additional steps to ensure the identity of the person applying for credit.
The initial fraud alert can stay on your credit report for up to 12 months, but an extended fraud alert will remain on your credit report for seven years unless you decide to remove it sooner.
- Report identity theft to the Federal Trade Commission (FTC).
Tips To Start Rebuilding Your Credit
- Get a credit card designed for low credit scores
- Get a credit-builder loan or secured loan
- Become an authorized user
- Get a co-signer
- Pay bills and existing credit on time
- Keep credit usage low
Tips To Maintain Good Credit Score
- Make payments on time
- Do not use up more than 30% of available credit
- Have a mix of revolving and installment credit accounts
- Open new credit lines (but not more than you can afford!)
Common Credit Report Errors To Look Out For
According to the Consumer Financial Protection Bureau, these are the most common errors consumers find on their reports:
- Wrong name, address, and phone number
- Mixing up your account with someone with a similar name
- New accounts owing to identity theft
Incorrect account status
- Accounts that are wrongfully reported as open, past due, or delinquent
- Accounts that wrongfully list you as the owner instead of authorized user
- Wrong dates in last payment, date opened, or delinquency status
- Same debt listed multiple times
- Information that is not removed, despite already being disputed and corrected.
- Accounts that are listed multiple times, with different creditors
- Incorrect current balance
- Incorrect credit limit
Frequently Asked Questions About Credit Repair
Can I remove hard inquiries from my credit report?
Hard inquiries can’t be removed unless they’re the result of unauthorized inquiries, in the case of identity theft, for example. Otherwise, they’ll have to fall off naturally, which happens after two years. Their impact on the credit score usually only lasts a few months.
How much will my credit score increase if a negative item is removed?
It depends on the item in question and how it affects the score. Seeing as past due payments account for a higher percentage than, say, hard inquiries, a late payment that drops off will raise the score significantly, while a hard inquiry will not make that much of a difference.
Can I dispute my credit score?
No. Credit scores are calculated based on the information found on a credit report, so if there is anything disputable, it will be found on the credit report.
Can I get a collection removed without paying?
No. Leaving a collection unpaid could trigger an unpleasant legal process and harassment from collectors. The collection will remain on the report until it can legally be written-off, but it simply cannot be removed without paying or settling the outstanding debt.
What happens when a debt goes to collections?
The original debt will get written or charged off, and the new debt sold to the collection agency will now be listed under debt collections, and all new updates will apply to this “new debt.” The collection agency is now the owner of the debt, and any negotiations and payments will be through them. The write-off from the original creditor and the new item listed by the collection agency will remain on your report.
Is it illegal to pay for delete?
It is not illegal to pay for delete, but it is an uncommon practice. It depends on the goodwill of the collection agency and will still require partial or complete payment of the debt.
Is it better to settle or pay in full?
Paying in full is always best. Settled debt is a negative remark on your credit report because it tells lenders that the original creditor had to renegotiate to recoup at least some money. However, if paying in full is impossible, settling is the next best option, as leaving an unpaid debt is still much more damaging than settling it.
Does paying in full increase credit score?
The effects of paying in full will depend on the type of account. Debt collections paid in full may or may not impact the credit score. Installment loans paid in full can actually lower the score because they become closed accounts, but this is a short-term drop. A credit card balance paid in full could increase the score, as long as you keep the account open.
Regardless of the effect on the actual score, paying the overdue debt in full looks better when lenders evaluate your credit report, as they can see that past financial troubles were taken care of.
Can debt collectors remove items from credit reports?
If the debtor negotiates a pay-for-delete agreement, the debt collector can agree to remove the collection from the credit report. The initial report from the original debtor, however, will remain as a separate negative item.
Is it true that after 7 years your credit is clear?
Each negative item will drop off on its own after 7 years from the date it was first reported delinquent. The account must be current, and all outstanding debt should be settled or paid in full.
If there is only one negative item and seven years go by, then yes, your credit will be clear, but if there are multiple negative items, these will not drop off at the same time, and your credit will keep some blemishes. Keep an eye on your credit report to make sure the items drop off in time, and if they don’t, time to start a dispute process.
To Sum It All Up
Although it is frustrating to learn that waiting is often the only way to clear negative items from a credit report, consumers should be well informed and capable of disputing errors that impact their score. The best form of protection is to regularly check credit reports and take advantage of the free yearly report everyone is entitled to.
Should you find yourself in a situation where you need to remove negative items from your credit report due to incorrect information or fraudulent debt, know it’s certainly possible to do so. But the process requires patience, and you must be open to pursuing all available methods.
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