Closing A Credit Account
The out of sight, out of mind mentality does not work here. Closing an account because you fell behind doesnt make it go away. It hurts your credit score even more.
Heres why.
Your credit length plays an important role in your credit score. If you close your credit cards, you lower your credit age. Now not only do you have negative information reporting, you lowered your credit age, which means your credit score fell even further.
Just because you close an account does not make it disappear from your credit report. The tradeline remains there, but it reports as closed by consumer which isnt good for your credit.
How Do I Remove Negative Items From My Credit Report
To recap the material already presented, you have several ways to legally remove negative credit report items:
- Dispute erroneous items on your credit reports by doing the work yourself.
- Hire a credit repair service to dispute inaccurate items on your behalf.
- Send a goodwill request.
- Send a pay for removal request.
- Wait for items to age off your reports.
The last item, waiting for bad items to age away, is the easiest method, as you dont have to lift a finger for it to work. The downside is that it may take several years to bear fruit.
You can initiate credit repair yourself without the expense, although youll have to devote some time to the process. Alternatively, you can pay credit repair companies to do the job for you.
are better positioned, have superior knowledge, and can usually complete the job for under $1,000, sometimes considerably less.
Dispute Credit Report Errors
The law allows you to dispute any item on your credit report in good faith if you are uncertain of its validity. In other words, if you cant find records that confirm the item, you cant recall missing a payment or you are just uncertain that the information has been reported correctly or is even yours, you can ask the bureaus to prove it or remove it.
The first thing you must do is to pull your credit reports from the three major credit bureaus. These are Equifax, Experian and TransUnion. You are entitled to a free copy of each report annually at AnnualCreditReport.com.
I recommend pulling them all at once if you are concerned about your credit now so that you know exactly where you stand with each reporting agency. Each one may have different information about you, as not all creditors report to all bureaus and the bureaus dont share information.
The best way to communicate with the bureaus is via good old-fashioned snail mail, sent certified with a return receipt requested. This will establish a paper trail that will serve you well should problems arise and is well worth the cost of the extra postage.
Go over the reports carefully and make note of any items that show up on one or two reports but not all three. This may not be a mistake it could just be that one bureau has more information than the others or it could indicate an error. But it is good to know what the differences are. Also, look for any items that you do not believe belong to you.
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Review The Claim Results
Reporting agencies and lenders usually take around 30 days to investigate disputes. Once they make a decision, they must notify you within five days of completing their review. The notice will inform you if the disputed item was found to be inaccurate or not.
If the disputed information was, in fact, inaccurate, the bureau must update or delete the item. They should include a free copy of your file if the dispute results in a change.
If the bureau or lender finds that the disputed information isn’t a mistake, you can file an additional claim. Review your initial claim for any errors and correct those. If possible, you should include additional documents to support your request, which can help the bureau evaluate any information it might have missed the first time around.
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File A Dispute Letter With The Credit Bureau
The FCRA requires credit reporting agencies to investigate any item you dispute on your credit report. They generally have 30 days to investigate and five business days after they complete the investigation to tell you the results. If you provide more evidence during the 30-day period, the investigation can be extended 15 days. Also, if youâre disputing an item on your free annual credit report, a CFPB rule gives the reporting agencies 45 days to investigate. After the credit reporting agency receives your dispute letter, they must contact the creditor or collection agency that provided the erroneous negative item. This entity is called the furnisher.
You can dispute an item on your credit report online, by phone, or via mail. The best option is to submit a dispute letter via certified mail with a return receipt. This gives you proof of when the reporting agency received the dispute letter, so you can hold them to the 30-45 day investigation timeline. Though you can file a dispute by phone or through the credit reporting agency’s website this is not a good idea because it doesnât provide the same paper trail.
Experian
P.O. Box 740256
Atlanta, GA 30374-0256
How Do Errors Impact Your Credit Score
Your is calculated using different models such as VantageScore and FICO, the two most widely used credit-scoring models. Each model has its proprietary metrics and criteria. However, both use data from the major credit reporting agencies to generate your score.
Both scoring models also consider similar factors when calculating your score. These include your total credit usage and length of credit history, for example. But your payment history is the most important factor when determining your credit score.
Your payment history alone makes up around 35% of your FICO score and 42% of your VantageScore 4.0. Since payment history is so significant, a single inaccurate late payment could impact your score considerably. According to FICO, if your report has a 90-day missed payment, your score could drop by as much as 180 points.
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Have A Credit Repair Professional Remove The Negative Items
If youd 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 nations leading credit repair companies.
Lexington Laws experts deal with credit reporting agencies every day. They know the Fair Credit Reporting Act inside and out.
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.
Learn More: Read our full Lexington Law Review or go straight to the companys website here.
Why You Can Trust Bankrate
At Bankrate, we have a mission to demystify the credit cards industry regardless or where you are in your journey and make it one you can navigate with confidence. Our team is full of a diverse range of experts from credit card pros to data analysts and, most importantly, people who shop for credit cards just like you. With this combination of expertise and perspectives, we keep close tabs on the credit card industry year-round to:
- Meet you wherever you are in your credit card journey to guide your information search and help you understand your options.
- Consistently provide up-to-date, reliable market information so you\’re well-equipped to make confident decisions.
- Reduce industry jargon so you get the clearest form of information possible, so you can make the right decision for you.
At Bankrate, we focus on the points consumers care about most: rewards, welcome offers and bonuses, APR, and overall customer experience. Any issuers discussed on our site are vetted based on the value they provide to consumers at each of these levels. At each step of the way, we fact-check ourselves to prioritize accuracy so we can continue to be here for your every next.
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Dumb Ways To Get Rid Of Negative Credit Report Items
Although the ideas above dont work, theyre not bad for you they just wont accomplish what you set out to do. But there are a few other things that you can do that are truly dumb either because theyll waste your money or break the law.
- Pay a company to remove a negative item that can be verified. If you legitimately incurred a negative item and it can be verified, then it cant be legally removed. Any company that tells you they can remove accurate items is a ! Theyre probably going to take your money and run
- Pay someone to help you set up a new credit profile. Other scammers tell you that you just have to start a new credit report. You use a different Social Security number or Employer Identification Number to start a new credit report. This is illegal and you can be criminally prosecuted for Social Security fraud!
How To Remove A Negative Item From Your Credit Report
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In this Article: How to remove a negative item from your credit report .
Negative items on your credit report, such as a collections account, can haunt you. It can affect areas of your life you didnt even realize until its happening and its too late.
Removing negative items from your credit report is tough, but is necessary if you want to move forward in any area of your life, whether applying for a new loan, getting a new job, or even opening a new bank account.
So, if you want to protect your , then remove each negative item from your credit report.
Check out the best ways to remove a negative item from your below.
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File A Dispute Letter With The Lender Or Collection Agency Directly
Since youâve already prepared a dispute for the credit bureau, this step should be easy. The best practice here is to send a dispute letter to the credit reporting agency and send a copy to the creditor or collection agency. This way, you’re preparing the strongest case against both the creditor and the reporting agency should they refuse to remove an erroneous item. Send both disputes via certified mail with a return receipt.
Lenders and collection agencies must investigate and respond to your claim just like the credit bureaus have to. Follow a similar process by detailing your dispute in a letter, including copies of supporting documentation, and sending copies and retaining the original documents. Ensure the lender or collection agency acts within the legal timeline and follow-up with their actions.
Can I Remove Negative Items From My Credit Report
If everything reporting on your credit report is legit, then youre stuck with it, but you have options. You will do more legwork and wait longer as the law is not on your side when the negative information is legit.
Still, you may be able to remove negative items from your credit report.
Check out these proven ways that have helped thousands of consumers.
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You Can Negotiate With Debt Collection Agencies To Remove Negative Information From Your Credit Report
If you’re negotiating with a collection agency on payment of a debt, consider making your part of the negotiations. You can ask the collector to agree to report your debt a certain way on your credit reports. Here’s how: The three major credit reporting bureausExperian, Equifax, and TransUnionproduce credit reports. Ask the collector to tell the bureaus to remove any negative information about the debt from your credit files. The collector might not agree, it might have to get the creditor’s approval first, or you might have to pay a bit more on the debt but it doesn’t hurt to ask.
And if you get the collector to agree to accept less than the full amount to settle the debt, be sure the collector also agrees to report the debt as “paid in full” on your report.
Filing A Dispute Via Mail
If you choose to dispute items on your credit report via mail, write a letter stating which item youre disputing. Include any facts that explain your case and include copies of documents. Enclose a copy of your credit report with the items in question circled or highlighted.
Be sure to provide your complete name and address and tell the company what your desired action is . Send your dispute letter by certified mail, return-receipt requested, so you can document the fact that the letter was mailed and received. Keep copies of your dispute letter and enclosures.
If there are changes as a result of your dispute, you can request that the bureau send notices of corrections to anyone who received your report in the past six months. If youve applied for a job, you can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.
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What Is Considered A Negative Item
Here are a few things that are considered negative items, which can impact your credit score:
Late Payments
Late payments are added as derogatory marks on credit after 30 or more days. The more the payment is delayed the more negative impact it has on your credit. They can remain on your credit history for up to seven years.
Charge-offs
Banks can charge the debts off if the minimum payment is not made for 180 days. They may also sell it to a debt collector, who becomes in charge of collecting the debt. It can also appear for seven years on your credit report which could have a major negative impact.
Collections
Collections mean that the creditors have sold your debt to a third party or a debt collector. The agencies then contact you personally to pay off the debt. This can lead to a negative credit report.
Foreclosures
Foreclosures occur when you fail to pay your mortgage and the bank seizes your home or property. This can leave long-lasting negative marks on a credit report.
Repossessions
Repossessions occur when you fail to make payments on time and your assets, like cars, for example, are seized. The collecting agencies usually come without prior warning. Repossessions can also remain on credit reports for seven years.
Judgments
Liens
Liens are a form of collateral security given on properties. The court allows creditors to sue the collateral property in case debt is not paid on time.
Bankruptcies
Send A Request For Goodwill Deletion
Writing a goodwill letter can be a viable option for people who are otherwise in good standing with creditors. If you’ve taken steps to pay down your overall debt and have been paying your monthly bills on time, you might be able to convince your creditor to forgive the late payment.
While there’s no guarantee that the creditor will delete the derogatory information, this strategy does get results for some. Goodwill letters are most successful for one-off problems, such as a single missed payment. However, they are not effective for debtors with a history of late payments, defaults or collections.
When writing the letter:
- Take responsibility for the issue that lead to the derogatory mark
- Explain why you didn’t pay the account
- If you can, point out good payment history before the incident
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Negative Impacts On Your Credit Score
Here is a list of factors that can impact your credit score in a negative way and stay on your credit report for up to seven years in most cases.
- Late Payments or Non-Payment: One of the most important factors of your credit score. Paying your debts late on a consistent basis can signal lenders that you cannot afford, or are unwilling, to pay your debts. If you are overdue on a payment by 30 days, according to Equifax, your score can drop 100 points.
- Having a charge-off: When a creditor gives up on you paying your debt, they charge off your account which can cause your credit score to drop by 100 points or more.
- Bankruptcy: This should be considered as your last resource. Declaring bankruptcy can negatively affect your score by up to 200 points or more.
- Foreclosure: Depending on what your starting score is, a foreclosure can cause up to a 100 point drop.
- Repossessions: A car repo may cause your score to drop over 100 points. Additionally, a note about the repossession will stay in your report for up to seven years.
- Judgments: This is when a court is involved to ensure debt repayment. The impact can vary but scores can drop over 100 points. This, along with tax liens, stay on your credit for 10 years and it is renewable for another 10 years if the plaintiff decides to go back to court.
- Collections: When a credit hires and outside firm to collect payment due on a debt. Categorized as payment history, scores can drop over 100 points too.