How To Remove Items From Credit Report Fast

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manny

in

Published on November 5, 2020

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how to remove derogatory items from credit report

Your credit report plays a huge role in your financial life. It contains details of your previous financial transactions and your current credit standing. This report helps creditors decide whether to approve your loan application or not. It also helps them determine if you have the financial capacity to pay back the money you wish to borrow. Aside from lenders, insurance companies, rental property owners, utility providers, and employers check credit reports.

A credit report contains both positive and negative information about your financial history. Positive items include timely payments and full debt payment. Meanwhile, negative items include the following:

  • Late or missed payments on credit cards and loans
  • Delinquent accounts
  • Bankruptcies
  • Foreclosures
  • Collection account
  • Charge offs

When you have bad credit, and you’re about to make a big financial decision (e.g., get a home loan), you want to repair your credit as fast as possible. Instead of waiting for 7 years to pass, which will naturally remove the negative record, you can take some steps to remove them before that.

In this post, you’ll learn what you can do to remove negative items from your credit report.

Why Do You Need to Remove Negative Items from Your Credit Report?

Negative items on your credit report will hurt your chances of getting the best loan or credit terms, or worse, not get approved at all. Although these negative items will appear on your report only for a certain period (7 to 10 years), leaving them be even if you can do something about it, can significantly affect your financial situation.

What are the types of negative information and how long they stay on your credit report?

  • Late payments – up to 7 years from the date of delinquency
  • Collection accounts – 7 years from the first missed payment date on the debt
  • Bankruptcies – Chapter 7 bankruptcy remains on a credit report for 10 years from the filing date, while Chapter 13 bankruptcy stays for 7 years from the filing date
  • Other negative accounts – repossessions, foreclosures, and short sales may remain on your report for up to 7 years

There’s nothing much you can do if the negative items are accurate. But if there’s an error in your report, you have to file a dispute with the credit bureaus right away. These errors might have been committed by the following:

  • Credit reporting agencies
  • Creditors or lenders
  • Identity theft
  • Your identity got mixed up with another

What are the Advantages of Removing Items From the Credit Report?

Your credit report affects more than just your personal finances. It has a significant impact on other aspects of your personal life that don’t involve credits or loans, such as employment. Having said that, it’s important to make sure that your credit report only includes accurate information. Errors must be removed as soon as possible. There are many advantages to removing negative items from your credit report, such as:

  • Easy car loan approval
  • Lower interest rates and more favorable loan terms
  • Higher chances of getting a tenancy application approved
  • Less trouble getting a job or security clearance
  • Better chances of getting a cell phone contract
  • Lower insurance premiums
  • Less stress and worry

What are the Implications if You Don’t Remove Negative Items From Your Credit Report?

Leaving off negative items on your credit report means you’ll get a lower credit score, which could lead to several unfavorable consequences, such as:

  • Bad credit makes it harder for you to borrow, whether it’s a credit card debt, mortgage, or car loan.
  • Even if you are offered a loan, you may have to pay higher interest rates.
  • Poor credit history may lead to fewer renting options. Landlords check the possible renter’s credit report to check if they can pay on time. You may get around having bad credit by offering to pay a higher security deposit.
  • You may be required to pay a deposit when you sign up for a utility, internet connection, or cellphone plan.

DIY Credit Repair Vs. Credit Repair Services

It’s not easy to fix your credit. You can’t erase bad credit overnight. But with patience, commitment, and the right strategy, you’ll be on your way toward having a better credit standing. You have two options when repairing your credit:

  1. Do it yourself
  2. Hire credit repair services

You have to know the advantages and disadvantages of both options so that you’ll know which one is suitable for you. Ultimately, the choice will depend on how much time, money, and effort you want to put into repairing your credit. 

If you only need minor negative items to be removed, then you might be able to deal with the repair yourself. But if your case is complex, and it involves disputing several negative items, then it may be well worth hiring a credit repair service.

What are the Advantages and Disadvantages of DIY Credit Repair?

In most cases, you don’t have to spend a dime to repair your credit. Additionally, you can do most, if not all, of the services offered by a credit repair company.

PROS

  • DIY credit repair saves you money because you don’t need to pay for costly credit repair services. Instead, you can use the cash to pay off your debt.

  • You don’t have to go through the grueling process of looking for reputable credit repair services.

CONS

  • You lack the experience and knowledge as to what can and can’t be done when repairing credit.

  • DIY credit repair means you’ll do everything. From talking to creditors to mailing dispute letters, you’ll spend a lot of time dealing with every aspect of the credit repair process.

  • Repairing your credit can last for weeks, months, or even years. Since it’s a long and complicated process, you might quit before you get the results you need.

What are the Advantages and Disadvantages of Credit Repair Services?

PROS

  • A credit repair company will take away the stress of personally having to fix your credit. They’ll do what needs to be done, including talking to your creditors, negotiating settlements, and removing errors from your report. Once the mistakes have been corrected, they’ll get in touch with the credit bureaus to make sure that your credit report reflects the changes.

     

  • A credit repair company knows how to negotiate. They can get you more favorable terms, lower payoff amounts, and in some cases, a complete write-off of your debt.

     

  • A credit repair company knows the intricacies of credit law, which they can use to your benefit.

Examples of credit repair companies:

CONS

  • Credit repair services can be costly. The monthly fee ranges between $70 and $129. You could be spending a significant amount on their services since the credit repair process may last for several months.

  • You have no guarantee that your credit standing will improve after getting their services.

How Do Credit Repair Services Remove Negative Items From Your Credit Report?

Credit repair companies follow different processes when repairing their client’s credit report. Here’s what they do in general:

  1. Review your file and check for incorrect negative items
  2. Ask you to check your credit report and create a list of errors and items you wish to be removed
  3. Contact your creditors and file a dispute and try to negotiate a new debt repayment plan with more favorable terms
  4. Try to get the negative items removed from your credit report

Under the Credit Repair Organizations Act, credit repair companies can’t engage in unfair business practices that would force a consumer into undue financial hardship. Furthermore, they can’t demand upfront payment before accepting your case. Lastly, they can only charge you for the services that were provided.

How Can You Repair Your Credit Yourself?

First, you must remember that you can’t remove negative information that is accurate from your credit report. You can only dispute, at no charge to you, negative items that are erroneous.

Here’s the process of repairing your credit. Let’s start with how to remove derogatory items from your credit report.

1. Review Your Credit Report

Review your credit report and determine the items that can be legally removed. You can get one free copy of your credit report a year from the three national credit bureaus: Equifax, TransUnion, and Experian. (More info below on how to reach them).

2. Send Your Documents

Submit a letter to the credit bureau that has the record (based on the credit report copy you obtained) detailing the information you believe is inaccurate. Don’t forget to include documents that support your claim and a copy of your credit report. Highlight the inaccurate items that you want to be changed or removed.

Here are the negative items you can request to be removed:

  • Debt that you already paid in full
  • Closed accounts that still reflect as open on your report
  • Incorrect account balances
  • Incorrect credit limits
  • Negative items that still appear after the statute of limitations

Send your letter through certified mail and make sure you request a return receipt for your records. You can also submit disputes through phone or online.

Dispute via Mail:

  • Equifax – P.O. Box 740256 Atlanta, GA  30374-0256
  • TransUnion – P.O. Box 2000 Chester, PA 19016-2000
  • Experian –  P.O. Box 4500, Allen, TX 75013

Online dispute forms:

Dispute Via Phone

  • Equifax – (866) 349-5191
  • Transunion – (833) 395-6941
  • Experian – (866) 200-6020

If you have several negative items to dispute, it’s better to send one letter for each dispute. Although there’s no limit to the number of disputes that you can submit, it’s best to keep it at a reasonable number to avoid making the credit bureaus think that you’re making frivolous claims.

3. Dispute with Creditors

If there’s inaccurate information on your credit report, you can file a dispute with the creditor in question. The process involved is similar to filing a dispute with credit reporting agencies. Under the Fair Credit Reporting Act, creditors should investigate your claims within 30 to 45 days, and you should be informed of the results of the inquiry within 5 business days after that.

The creditor should also inform the credit bureaus about the dispute and should provide them with accurate information if they’ve confirmed your claim to be true. You should also inform the credit bureaus of the investigation results and provide them with the documents proving that the creditor agrees with your dispute.

4. Consider Pay-For-Delete Offer or Goodwill Deletion

Another question you may have in your mind right now is how to remove negative items from your credit report before 7 years. Although you can’t remove an accurate negative item from your credit report by filing a dispute, you can try a pay-for-delete offer to your creditor. 

This option involves offering to pay your debt in full and in return, your creditor will have the negative item removed from your credit report. If you already paid off your debt but the negative mark is still on your credit report, you can try a goodwill request for deletion from the creditor involved.

5. Find Ways to Get Current on Your Past-Due Accounts

You can deal with your past due accounts by paying a lump sum to cover all your missed payments. If you don’t have enough cash to pay all your past-due balance at once, ask your creditor if they can spread it over a few months.

You have to avoid getting your account charged off (deemed uncollectible), which will adversely affect your credit score. Not only that, it will result in the closure of your account, and you’ll have to pay the whole balance in full to resolve it.

6. Decrease Your Credit Utilization Ratio

Having a high credit utilization ratio won’t help you rebuild your credit. You have to decrease it by paying off your credit card balances. It’s best if each of your credit cards has a less than 30% credit utilization ratio.

7. Find New Sources of Credit

Use secured credit cards and store cards as your other sources of credit. You can also be an authorized user on another person’s account, such as a close friend or a relative.

Conclusion

There’s no magic trick to fixing your credit report. But with the right strategy, you’ll eventually improve your credit standing. You have the option to hire a credit repair company or repair your credit yourself. Be sure to choose the option that will serve your best interest.

Have you ever tried filing a dispute and requesting a credit report correction? We’d love to know how your experience was! Help others by sharing in the comments below!

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