How to Remove Negative Items from Your Credit Report

Blog posted On June 09, 2021

Your credit score can influence a lot of different opportunities, including your ability to buy a home. Different loan programs have different credit requirements, and the higher your credit score, the better chance you have at getting approved. A higher credit score can also increase your chances of securing a lower interest rate, which can save you thousands over the life of your loan. So, it’s important to stay on top of your credit, and if you notice a negative item bringing down your score, here’s what you should do.

1. File a dispute with the credit reporting agency

To start your dispute, you will have to write a letter to a credit reporting agency. The three main credit reporting agencies are Equifax, Transunion, and Experian. Each of the agencies’ websites will have a section explaining the steps of disputing a claim. By visiting any of their websites, you can find more information on how to send your letter – whether it’s online or by mail.

In the letter, you will explain your credit report’s inaccuracy. Strong letters will include:

• Specific descriptions of each inaccuracy you’re disputing
• Thorough explanations of why the reported items are inaccurate or incorrect
• An explicit statement saying that you want the item removed from your credit report
• Copies of any documents that can support your statement

Once you have finished writing your letter, you will mail it by certified mail with a return receipt requested. A return receipt will ensure that the agency receives your letter and will be processing your claim. The Fair Credit Reporting Act requires that creditors report accurate statements, so if you make a dispute, they are legally obligated to review it and investigate your claim.

2. File a dispute directly with the reporting business

A reporting business is typically a bank or credit card issuer. These businesses, like credit card agencies, are also required to review and investigate your claim. If you write a letter to these businesses, and they correct the issue, you can bypass writing a letter to the credit agencies. In the case that there is an issue on your credit report, the reporting business is required to notify all of the credit bureaus.

3. Negotiate “pay-for-delete” with the creditor

Pay-for-delete is a strategy you can use to get rid of negative but accurate items on your credit report. It’s most beneficial when used with delinquent or past due accounts. Creditors will want to get as much money back as possible, so if you offer to pay the account, then the creditor might remove the negative item from your credit report. However, it’s not a guaranteed solution; it’s a request to the collection agency that could likely be rejected. Even if they accept your request, it still won’t completely remove the item from your report. It also might not be necessary. The most updated credit scoring models (FICO 9 and Vantage Score 3.0) don’t evaluate paid collection accounts.

4. Send a request for “goodwill deletion”

A goodwill deletion is like a pay-for-delete without the offer to pay. Instead, you write your creditor a letter and try to explain the negative item, why it was a mistake, how it won’t happen again, and ask for it to be removed. This tactic is most successful for simple problems like a single missed payment. To write the strongest letter:

• Take responsibility for the negative item
• Explain why it happened
• Point to your otherwise good credit history

5. Hire a credit repair service

Credit repair services can be a good option if you have multiple inaccuracies, but before you hire them, it’s important to know what they can and can’t do. What they can do is straighten up credit report errors, dispute negative entries, and handle negotiations with creditors. They likely won’t be able to remove accurate negative items completely or provide false information about your credit status. Make sure that they provide you a written contract explaining exactly what they will do, how long it will take them, and the total cost. You will then have three days to review the contract and either sign or cancel penalty-free. 

6. Work with a credit counseling agency

There are several credit counseling services, like the National Foundation for Credit Counseling, that can help clean up credit disputes. Typically, they will work with you to review the credit reports, communicate with lenders, and create a debt management plan with you. To make sure that a credit counseling agency is legitimate, cross check it with your state’s Attorney General, local protection agencies, and the United States Trustee Program.

You’re entitled to one free credit report per credit bureau year, and you should take advantage of this opportunity to look for any credit irregularities. To access your free credit report, visit AnnualCreditReport.com. It might seem like a hassle to go through now, but the quicker you sort out any credit dispute, the quicker your credit score can improve and the more financial options you will have!

Sources: Money.com