Can You Remove Negative Information From Your Credit Reports
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Your credit reports are like a financial report card an extremely useful record that helps lenders evaluate the risk involved in loaning money to you.
They contain information about your credit history including some bill repayment activity and the status of your credit accounts. This information includes how often you make your credit card or loan payments on time, how much total available credit you have, how much of that credit you’re currently using and whether you have outstanding debt.
If you’re delinquent on your loan payments, your debt may be transferred or sold to a collection agency. At that point, a new lender will be added to your credit reports, meaning your debt will appear twice: once with the original lender and again with the collection agency. You will have a set period of time to pay off the debt with the collection agency. The debt will stay on your credit report for as long as it remains unpaid and can only be removed approximately seven years from when you were first found delinquent.
Hire A Credit Repair Service
Disputing errors can be time consuming, especially if your history has several mistakes or if you were a victim of identity theft. Reputable credit repair companies such as , Lexington Law or Sky Blue may be viable solutions if your file is riddled with inaccuracies.
Credit repair services can help you dispute inaccurate negative information and handle creditor negotiations. However, if you decide to hire a credit repair agency, remember there are consumer protection laws that regulate how they operate and what they can do. The establishes the following regarding credit repair services:
- They cannot provide false or misleading information concerning a persons credit status and identification
- They must provide a detailed description of the services they provide
- They cannot charge for their services until they have been completed
- There must be a written contract detailing the services theyll provide, the time frame in which these services will be provided and the total cost for them
- They cannot promise to remove truthful information from your record before the term set by law
- You have three days in which to review the contract and cancel without penalty
Can You Remove A Collection Entry From Your Report
If you have a collection entry, the simple answer is yes. Its possible to remove it in most cases. And thats something youll want to do. A collection entry appearing on your credit bureau can hurt your credit score and, in some cases, stop you from getting car loans and mortgages.
Before we discuss how to remove a collection entry, it helps to talk about what a collection entry actually means, how much it can lower your credit score and how long it can remain on your credit report if you dont do anything about it.
Can you use some help with your finances? Learn about credit counselling today.
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Here Are The Steps You’ll Need To Take To Clean Up Your Credit Report
Get Free Weekly Credit Reports During the Coronavirus Crisis
Equifax, Experian, and TransUnion are offering free weekly online credit reports during the COVID-19 pandemic. Go to AnnualCreditReport.com to get your free reports.
Everyone should review their credit reports annually and, if necessary, take steps to clean them upthat is, get rid of inaccurate and old information. To clean up your credit reports, you’ll need to order copies of your reports from the three major credit reporting agencies , review the reports for inaccuracies or old information, and then ask the credit bureaus to correct the information.
Contact Transunion And Equifax Using Their Resolution Form
Nest, youll want to contact the credit reporting agencies. There are two main credit reporting agencies: Equifax and TransUnion. You can use their online resolution forms to start the dispute process.
Keep in mind that the credit reporting agency is not required to make changes because you ask them to. They will look at the evidence you gathered to decide if your claim is true. If they do find an error on your credit report, they will correct it. They will also tell all the other major credit reporting agencies. This will help to ensure that your credit report is accurate and up-to-date.
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Wait Until It Falls Off
When the debt in question is legitimate and you cant convince the debt collector to delete it from your report, your only remaining option is to wait. After seven years from the date the account first became delinquent, the collection should fall off of your credit report.
Although this means the collection will continue to impact your credit score its impact will lessen as time passes.
Documentation To Provide For Your Dispute
In addition to the above, you’ll need to provide:
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Proof of identity
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Your Social Security number and date of birth
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A copy of government-issued identification
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Your current address and past addresses going back two years
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A copy of a utility bill or bank or insurance statement that includes your name and address
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How To Improve Your Credit Score
If your credit score is low, there are steps you can take to help improve it. You can:
- lower your credit card limit
- limit how many applications you make for credit
- pay your rent or mortgage on time
- pay your utility bills on time
- pay your credit card on time each month either pay in full or pay more than the minimum repayment
As you do these things, your credit score will start to improve. So you’ll be more likely to be approved next time you apply for a loan or credit.
If you’re struggling to pay bills and are getting into more debt, talk to a free financial counsellor. They can take you through the options and help you make a plan.
How Will Disputes Affect Your Credit Score
Its important to know how credit scores are affected when you dispute your credit report in Canada.
Filing a dispute with the credit bureaus doesnt impact your credit score. If your dispute results in a change to your report that could affect your score.
The changes could be positive or negative, depending on the outcome of the dispute. If you dispute an error on your credit report, the credit bureau might remove the error. This could improve your credit score. If you dispute an accurate item on your credit report, it could lower your credit score. Making it imperative you only file a dispute if youre certain that theres an error.
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Make Sure You Have A Fair Amount Of Credit That Youre Not Using
Continuing our discussion of credit limits, based on the information outlined above, you can see that if you are not carrying a balance on a credit card or line of credit of more than 30% of your credit limit, youre going to have a lot of credit thats available to you that youre not using. This is one of the best ways to restore your credit score: have a good amount of credit thats available to you but dont use it. This shows that you are not only responsible, but it makes it unlikely that an emergency or minor financial setback could derail your finances and prevent you from being able to repay your debts.
Having a good amount of credit available to you doesnt mean you have to have a $20,000 credit limit. If you have a $3,000 credit limit, but never carry more than a small balance on the card, this should work fairly well at enhancing your credit score.
If you have bad credit and no one wants to offer you new credit right now, you could save up some money and get a secured credit card. To get this type of credit card, you put down a certain amount of money as security for a credit card and you receive a certain limit in return. Cash secured cards start at round $200 to $300, and your cash deposit guarantees the credit card issuer that they will be paid. In a worst case scenario, they could close your card and use your cash deposit to pay off your outstanding balance .
What Does Cleaning Up Your Credit Report Mean
When you clean up your credit, you get it in the strongest shape possible so lenders view you as a trustworthy potential borrower.
Each credit reporting agencyExperian, TransUnion and Equifaxhas its own process you can use to dispute information you believe appears erroneously. This could include personal information or accounts that do not belong to you.
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Wait For The Items To Age Off Your Reports
You should know two things regarding the effects of negative information on your credit score:
The following chart summarizes the maximum time a negative item can remain on your credit report.
The longest-lived item is a Chapter 7 bankruptcy, which hangs around for up to 10 years. In Chapter 7, all your debts are forgiven, and you owe nothing. A Chapter 13 bankruptcy, in which you agree to pay back some or all of your debts, remains on your report for seven years.
Credit reporting agencies are supposed to promptly remove any items that age off your credit report. If they forget, you can remind them by filing a dispute. The bureau should then remove the item within 30 days.
Offer Pay For Removal
Pay for removal is when you request that the debt collector removes a collection entry from your credit bureau for payment. Theres nothing that requires the debt collector to agree to this. Whether a debt collector agrees to this usually depends on the debts age and the amount, and your previous account history.
Before you request this, make sure youre aware that by offering pay for removal, youre agreeing to pay the full amount owing to the debt collector, plus any interest and fees. If you were in the position to do this, you probably wouldnt have ended up in collections in the first place, so this isnt always feasible.
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Reduce Your Credit Balances
If the balance you are carrying on any of your credit cards, line of credit, or overdraft is over 50% of your credit limit, this could be hurting your credit score. One of the big factors in determining your credit score is how much credit youre using compared to your credit limits. If you have a $5,000 limit on one of your credit cards, and your balance is $500, then you are using 10% of your limit. However, if you have a balance of $4,500 on the card, then youd be using 90% of your credit cards credit limit.
If you were the credit card company, what would you do if someone in the first scenario asked you for a credit limit increase? Since they only have a balance of $500, it would appear as though everything is fine, and they are using the credit responsibly . However, if someone with the second scenario asked you for a credit increase, you may be a bit more cautious and ask a few more questions. If all their other credit cards are close to being maxed out and they dont have any savings, one emergency, job loss, or illness could push them into a bad situation where they might have difficulty repaying their debt. This is why the amount of debt you are carrying compared to your credit limits is important to lenders. Its one way of estimating how much room you have before you have a problem.
Make A Goodwill Request For Deletion
If you have a good relationship with a creditor that has listed a late or missed payment, consider sending a goodwill request for deletion letter. The letter requests the original creditor to pretty please remove the offending item from your credit report. You can send the letter through the mail or make the request through email or on the phone.
Goodwill deletion requests work best when you have a long and positive relationship with the creditor. Naturally, youll have to be completely current on your payments to the creditor. The letter you send should be polite because the creditor is under no obligation to agree.
As with other credit repair letters, examples of goodwill request for deletion letters are available on the internet for free. Note that a creditor may be willing yet unable to remove an item due to its own policies or agreements with credit reporting agencies. Nonetheless, you have nothing to lose by making the request, except for some of your time.
Since a goodwill letter is not considered an official credit dispute letter, you may never get a response back from the creditor there are no mandatory deadlines for response. Your best bet is to demonstrate that the late payment was a rare oversight, and youll never do it again.
Goodwill letters are usually less successful for more serious transgressions, such as collections and repos.
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How To Dispute Accurate Information In Your Credit Report
Accurate items in your record can’t be removed before the term set by law expires, which is seven years for most negative items. For example, if you truly missed payments on your credit card, your dispute to remove that information will be denied. However, the information will automatically fall off your credit report seven years from the time you missed the payments.
If you do have valid negative items on record, here are some things that might help:
How To Check Your Credit Report For Collections
Checking your credit reports regularly can help you determine whether you have any collection accounts that might be hurting your score. You can request a free copy of your Canadian credit report from Equifax Canada and TransUnion Canada in writing. If you dont have time to wait for your credit reports to be mailed out, you can purchase a copy of your credit reports from either bureau online.
Keep in mind that your credit reports and credit scores are two different things. The information in your Canada credit report is used to calculate your credit scores. If youd also like to see your scores, you can request them separately from each credit bureau for a fee.
Once you have copies of your Equifax and TransUnion credit reports, review them carefully. Look for any collection accounts and if you find them, make a note of:
- Who the debt is owed to
- The name of the collection agency, if there is one
- How much is owed
- How many payments the account is behind
Also, make sure you have the right contact information for debt collectors, which youll need for the next step. Again, some creditors will route past due accounts to their in-house collections department while others will assign or sell past due accounts to a collection agency. You need to know who to contact if you want to remove collections from your credit report in Canada.
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One: Get Copies Of Your Credit Reports
Most people will only be concerned with credit reports from the three main CRAs: Equifax, TransUnion, and Experian. You’re entitled to one free copy from each agency every 12 months. Go to AnnualCreditReport.com to get your reports. Also, as part of a settlement in 2020, finalized in 2022, you can get six free credit reports each year, for seven years, from Equifax. The free reports are in addition to the one free Equifax reportand the free Experian and TransUnion reportsthat you can get each year at AnnualCreditReport.com. And, in some situations, you can get free copies more often. And you can always pay a small fee for your report, although this usually isn’t necessary given all the ways you can get free reports.
You should order your report from all three, as they often contain different information. Some people like to stagger the timing, for example, ordering one from Equifax one month, and then ordering one from TransUnion four months later.
Fixing Errors In A Credit Report
Anyone who denies you credit, housing, insurance, or a job because of a credit report must give you the name, address, and telephone number of the credit reporting agency that provided the report. Under the Fair Credit Reporting Act , you have the right to request a free report within 60 days if a company denies you credit based on the report.
You can get your credit report fixed if it contains inaccurate or incomplete information:
- Contact both the credit reporting agency and the company that provided the information to the CRA.
- Tell the CRA, in writing, what information you believe is inaccurate. Keep a copy of all correspondence.
Some companies may promise to repair or fix your credit for an upfront fee–but there is no way to remove negative information in your credit report if it is accurate.
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