It’s smart to know how to remove negative items from your credit report, especially if you are soon to be applying for a mortgage or car loan.
In fact, you can remove something from your credit history before seven years pass.
Whatever you’re dealing with, late payments, collections, charge offs, or foreclosures, the following techniques can clean up your credit quickly.
Here’s How To Remove Negative Items From Your Credit Report
Here are 4 steps to follow to remove negative items from your credit report:
Check For Inaccuracies
Before you try anything else, you should first make sure the negative entry on your credit report doesn’t include inaccurate information.
In reality, most people’s credit reports contain at least some errors.
The trick here is to look for any errors on each negative entry. Just because the entry itself is accurate doesn’t mean the details about the entry on your credit report are free of inaccuracies.
In fact, when you look closely, you’ll likely find an error or two.
The first step is to get a copy of your credit report from each of the three credit bureaus and look over each entry and check each detail against your records.
YOU SHOULD CHECK THE FOLLOWING ITEMS:
- Account number
- Date opened
- Account status (e.g., Closed)
- Payment status (e.g., Collection)
- High Balance
- Credit Limit
- Anything else that appears to be inaccurate
Every time you find an error, make a note of the inaccurate information along with how the entry should be corrected. These details provide the grounds for your credit dispute letters.
Submit a Credit Dispute Letter
You’ll want to write a detailed dispute letter that outlines all the inaccuracies you have found.
You will send this letter to the credit bureaus asking them to correct the inaccuracies or remove the negative information altogether.
The federal Fair Credit Reporting Act (FCRA) requires credit bureaus to report only accurate information on your credit report.
Many times the credit bureaus can’t verify each detail about the negative entry, so it has to be removed.
You will have to send the same dispute letter to all three major credit bureaus — Experian, Equifax, and TransUnion — if the negative information appears on all three of your credit reports.
If this sounds overwhelming, you might want to reach out to a credit expert.
It costs some money but is far less expensive than you might think considering you are getting
your own lawyer to fight on your behalf.
Write A Goodwill Letter
If disputing the negative entry doesn’t work because you couldn’t find errors, or because the credit bureaus fixed them, your next step should be asking for a goodwill adjustment.
Write a letter to the original creditor or collection agency and ask them to remove the negative entry from your credit history as an act of goodwill.
This is most effective when you’re trying to remove late payments, paid collections, or paid charge offs.
A goodwill letter is really easy to write. You can use my goodwill letter template as a starting point.
You will basically explain your situation to the creditor or collection agency. Explain how you’re trying to get a mortgage and the negative entry means you’re struggling to get approved.
While this may seem like a long shot, you’d be surprised how often creditors make goodwill adjustments. This is especially true if you’re a current customer because the creditor wants to keep your business.
This strategy won’t work as well if you have a long history of keeping past due balances. It works best if your negative entry is an anomaly and if you’ve paid off the balance due.
Negotiate a “Pay For Delete” Deal
If you have collection accounts or charge offs that you have not paid off, you should try a pay-for-delete agreement to have the negative item removed from your credit report.
For this to work, be prepared to negotiate with the creditor or collection agency over the phone.
Offer to pay the unpaid debt if the creditor will agree to delete the negative entry from your credit report entirely.
This is very effective, especially with collection agencies because they earn a direct profit when you pay an old debt.
But you must get your pay-for-delete agreement in writing before you make the payment.
Negotiate over the phone if that’s more convenient, but don’t pay anything until you have the written agreement in hand.
Collection agencies have short memories (unless you still owe them money). You may need your written agreement to prove you had a deal in place when you paid.
Have a Credit Repair Professional Remove the Negative Items
If you’d rather not send dispute letters, goodwill letters, or negotiate pay-for-delete agreements, you could always hire a credit repair service to do this work on your behalf.
I suggest you check out Lexington Law, one of the nation’s leading credit repair companies.
Lexington Law’s experts deal with credit reporting agencies every day. They know the Fair Credit Reporting Act inside and out.
Credit repair companies like Lexington Law charge monthly subscription fees plus an upfront first-work fee.
They can usually remove inaccurate information a lot faster than you could by yourself. Professional credit repair projects tend to take two to three months.
You may spend $400 to $500. This would be money well spent if it restored your good standing with lenders in time to secure a loan with low-interest rates.
Will Removing Negative Information Fix My Credit Score?
Often, negative entries — whether accurate or inaccurate — lower your credit score and prevent your score from increasing over time.
But every consumer’s situation is unique. Inaccurate information may not be your credit score’s only problem. If that’s true, its deletion may not achieve the immediate results you’re looking for.
In this case, you’ll need a more holistic approach to credit repair — a way to develop better habits with your lenders — so your score can increase organically.
What Will Help Improve Your Credit Score
- Your Payment History: Delinquencies and missed payments hurt your credit score more than most other factors. In fact, the FICO scoring model ranks payment history as most important in your credit profile.
- Your Credit Utilization Ratio: If you’re using a lot of your available credit on your credit cards, expect your credit score to suffer. For best results, pay down your credit card balances to 25%. Never exceed 30% of your available credit lines. Often, keeping an account or two open after you’ve paid them off can decrease your credit utilization ratio and increase your score.
- Other Factors: Keeping a mix of different types of credit — a student loan, a couple credit cards, a car loan, and a mortgage, for example — will help your credit score some. Limiting new credit applications can help, too.
Developing these good habits will help a lot, but let’s be clear: a major negative entry like bankruptcy, foreclosure, or repossession on your credit file will cause bad credit.
The good news: Even if you can’t get them removed using the four strategies I outlined above, these negative items on your credit report hurt your score less and less as they age.
So by making good credit decisions now, you’re adding positive information to your credit history that’s newer than your negative information.
Your good decisions will help your score eventually!
How to Monitor Your Credit to Detect Inaccuracies
Along with inaccurate information about you, that debt collectors may report to Experian, Equifax, and TransUnion, you should also lookout for signs of identity theft on your credit reports.
Identity theft happens more and more now as data breaches and scams keep exposing our sensitive financial data.
Here’s how to monitor your credit to make sure it’s in good standing with all three reporting bureaus:
Get Free Credit Reports
Visit annualcreditreport.com to order or download a free credit report from each of the three major credit bureaus.
These reports won’t show your credit score, but you can check them for inaccuracies and new credit applications you didn’t make — all of which affect your credit score.
Federal law gives you the right to one free credit report from each credit bureau each year.
Temporarily, because of the Covid-19 pandemic, you can get one free credit report from each bureau once a week.
This provision is scheduled to expire in April of 2021. After that, you’ll have access to a free credit report only once a year.
Use a Free Credit Monitoring Service
More importantly, you can set these apps to send a notification or a text message anytime someone applies for new credit in your name.
This provides a great first line of defense against identity theft.
A lot of credit card issuers will now show your FICO score on their apps or online platforms.
Discover, for example, offers this service. In this case, a big drop in your FICO could warn you about inaccuracies or fraud.
Pay for a Credit Monitoring Service
TransUnion, one of the major credit bureaus, offers a credit monitoring service that requires a fee. I have used this service myself.
You can find a lot of other fee-based credit monitoring systems out there.
So why would you pay for credit monitoring when you can get it free?
Paid services have more elaborate tools, but they also have ways to help you recover from identity theft rather than simply detect it.
Strategies That Won’t Help Remove Negative Information
So now you know four strategies for getting negative entries off your credit file.
Sometimes, though, it helps to know what won’t help remove negative information.
If you’re searching for credit repair answers, know that these things won’t help fix your credit:
- Paying Off Old Stuff: A lot of people think debt collectors will remove negative information from their credit if they can just pay off the charge-offs, past-due balances, and collection accounts. In reality, paying off these accounts will not help your credit. Lenders will still see you had trouble paying off previous accounts. (See pay-for-delete agreement above for the big exception to this rule.)
- Bankruptcy: Filing bankruptcy could help restore your financial health by reorganizing or dissolving old debts. But it won’t help your credit score. In fact, the bankruptcy will pull down your score for up to 10 years. Plus, the road to bankruptcy is paved with late payments, missed payments, and collection accounts — all of which will remain on your credit report along with the bankruptcy.
- Closing Delinquent Accounts: A closed account won’t look any better to prospective lenders than an open account. In fact, closing accounts could hurt your score since FICO places value on older average ages for credit accounts.
A Credit Report is Complex Yet Simple
Your credit report changes every month. All your lenders add and subtract information. Your report from each credit bureau is different from the other two bureau’s files on you.
Then, all this data gets distilled into a three-digit number that most lenders equate with your identity. It’s easy to see why credit is so confusing and frustrating.
But here’s a simpler way to look at it: To get rid of your bad credit, you can:
- Remove Negative Information
- Add Positive Information
- Be Patient
Ultimately, that’s how you play this game. This post has been about removing negative information because doing this can increase your score quickly.
But adding positive information is just as important. You can add positive data by making on-time payments, keeping your credit card balances paid down and applying for new credit only when you feel certain you’ll get approved.
Over time you’ll start seeing your credit score climb.
Negative Items to Get Off Your Credit Report
Check out the following articles for each type of negative entry that you should remove from your credit report:
- Charge Offs
- Late Payments
- Medical Collections
- Hard Inquiries
- Tax Liens