This is article eight of Part One of the “Conquering Debt Series.” Read article seven of Part One here.
Have you looked at your credit report recently? If you have, did it confirm your worst fears?
Maybe you saw negative marks due to late payments, or debts that have since gone to collections. You can’t always erase the bad information from your report, but there are some simple steps you can take to make a bad situation better.
In this article, I am going to discuss seven steps that will help you cope with a bad credit report.
CORRECT ANY ERRORS ON YOUR REPORT
It’s not uncommon to find incorrect information in your credit file. If you have discovered false information, you have a legal right to correct the information.
You should send a written dispute to each credit bureau that has reported the incorrect information. By law, the credit bureau must investigate your dispute and correct the mistakes. In most cases, the bureau has thirty days to get back to you with the results of the investigation.
You also have the right to dispute the incorrect information directly with your creditors. Just keep in mind, if you go directly to the creditor, it does NOT give you the right to seek legal relief if the creditor decides to ignore or mishandle your dispute.
After you get things corrected, you still need to check back periodically to make sure that it has been deleted permanently. False information has a habit of popping back up even after the mistake has been corrected.
There are three major credit reporting agencies. Just because you get a favorable response from one credit bureau doesn’t mean that the other two agree.
You should do the following:
- Obtain another copy from the credit bureau that reported the incorrect information to confirm that the corrections were made.
- Check to see if the other credit bureaus contain the same false information and if so, send the results of the investigation to those agencies as well.
- Get another copy of the report from credit that first reported the incorrect information three to six months later to make sure the bureau has not put the information back in your report.
- Consider requesting that the credit bureaus notify past users of the corrections. The bureaus are required to do this only if you request it, and only if you already filed a dispute with them.
If you have tried to dispute an error with the bureaus and were unsuccessful, you can file a complaint with the Consumer Financial Protection Bureau.
GET HELP FROM THE CREDITOR
As I mentioned above, if you file a dispute with a specific credit bureau, they can delete unverified information that a particular debt was ever owed. However, they won’t remove it if the creditor insists you owed the money and verified that information.
If you want to persuade the creditor that its information is inaccurate, you need to supply any proof that you have. If your evidence is not good enough, you might have to pay all or some of the debt back (either in full or in installments).
If you do agree to pay back the debt you think is inaccurate, make sure to get a written agreement from the creditor to delete the negative information.
If you get lucky and are persistent (and talk to a manager), there is a chance that they will agree to have you pay off the debt in installments amounting to much less than the full amount owed.
If you are successful, and the creditor does agree to delete the information, it can contact the credit bureau to have it removed. If they don’t do that, they will do the next best thing and not verify it’s original information if asked by the credit bureau. Then, when you dispute the item, the data won’t be verified on reinvestigation, and it will have to be deleted.
CLEAN UP YOUR PUBLIC RECORD INFORMATION
Some of the most damaging information in your credit report can come from public records. This can include arrests, convictions, judgments, foreclosures, tax issues, and liens.
The best way to remove this information from your credit report is to reach out to the actual source. Is there a specific government agency that is supplying the data to the credit bureau?
For example, you may be able to come to an agreement with a creditor to remove a default judgment against you in return for a promise to enter into a repayment plan. The court record will no longer indicate a default. You can then dispute the information with the credit bureau, and they will have to delete it because it can no longer verify the accuracy of its entry of a default judgment.
DELETE OLD INFORMATION
How long does bad information have to stay on your credit report:
- Accounts sent for collection or charged off.
- Lawsuits and judgments.
- Paid tax liens.
- Most criminal records.
- Records of criminal convictions.
- Positive information.
If you find any old information on your credit report, you need to follow the steps mentioned above in this article to request that the credit bureau investigate and delete the information.
EXPLAIN DAMAGING INFORMATION
It can be helpful to send a statement to the credit bureau explaining the negative information on your credit report. Credit bureaus are required to accept your statement if it relates to why information in the report is inaccurate.
The credit bureaus don’t have to include in your file your explanation of why you were delinquent, but they may agree to do so.
The statement you send is limited to one hundred words if the bureau helps you write the summary. Otherwise, there is no word limit. I suggest keeping your statement very short.
If you request it, the bureau must give the statement or summary to anyone who received a copy of your credit report within the past six months (or two years if it was for employment purposes).
DON’T OVERREACT TO THREATS
Creditors may threaten to send negative information to the credit bureaus, but that threat is usually only meant to pressure you to pay. The reality is that they automatically report information about your account every month, regardless of any threats.
Debt collection agencies also like to make threats. Just like the creditors, they automatically report the fact that your account has been sent to a collection agency.
If any of your accounts are in default or have been sent to a collection agency, the damage is already done to your credit report.
SAY “NO” TO CREDIT REPAIR AGENCIES
Avoid companies that promise to fix your credit record for a fee. Just don’t do it. They usually call themselves credit repair, credit service, credit clinic, or other similar names. These companies can’t deliver what they promise. You can generally do a better job cleaning up your credit record for free, just by following the tips in this article.
Beware of these common claims made by credit repair companies.
“We can erase bad credit.” The truth is that no one can erase bad credit information from your report if it’s accurate.
“Only we can remove old or inaccurate information.” The truth is that, if there are legitimate errors on your report or information that is old, you can correct it yourself.
“The information on your report is accurate, but we’ll erase it anyway.” If this means lying to the credit reporting agencies, it is illegal.
By completing these seven steps, you will feel a lot better about your credit report and the information in it.