Ways to Legally Remove Items from Your Credit Report in 2020

Legally Remove Items From Credit Report
GUIDE
Eric Bank
By: Eric Bank
Posted: November 18, 2020
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Your credit score can be a passport or an obstacle to a better lifestyle, which is why you may want to legally remove items from your credit report.

Credit scores summarize your creditworthiness in a single number that credit bureaus calculate using the items on your credit reports. Legally removing negative items can help you move from a poor credit score to a good credit score.

Read on to learn how to legally purge negative items from your reports and, thereby, improve your credit score.

1. Credit Repair | 2. Disputes | 3. Pay for Delete | 4. Goodwill Request | 5. Time
Illegal Tactics to Avoid | FAQs

1. Hire a Credit Repair Company

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The Fair Credit Reporting Act (FCRA) entitles you to dispute inaccurate items on your credit reports. You can do so through the mail or online at the three credit reporting company websites.

While you can attempt to fix your credit yourself, the process requires effort, patience, organization, and expertise. For what many consumers consider to be a reasonable price, you can hire a credit repair organization to do the work for you.

Credit repair organizations work with you by first identifying questionable and inaccurate items on your credit reports and then disputing those items with the credit bureaus.

Some disputes are easy to resolve, such as the removal of outdated information. Other disputes require more work, including submitting evidence to contest items and forcing the bureaus to validate questionable data. The ideal outcome is to remove enough negative items to give your score a boost.

Most credit repair services offer a free consultation to review your credit reports and identify fruitful areas worth challenging. The credit specialist will review with you the different plans the company offers, what services come with each plan, and how much each plan will cost you.

If you want to proceed, you engage the service by subscribing to a plan and paying a monthly fee. Most services recommend you subscribe for six months, but you can cancel at any time.

The credit repair organization will challenge a specified number of items on your credit reports each month, depending on your chosen plan. In some cases, a simple challenge is enough to correct or remove an item. In other cases, the service will formally dispute items by posting online communications containing the detailed objections and evidence required to fix the problem.

Upon receipt of a credit report dispute submission, the credit reporting company has 30 days to investigate the matter and decide what to do. In the course of the investigation, the bureau will forward disputes to the original credit provider that furnished the information. The information provider will review the credit report dispute and report back to the credit reporting bureau.

If the information provider finds that the information was inaccurate, it must advise that fact to all three credit bureaus and request its removal. When done, the credit reporting bureau will report the results in writing to you and send you a new copy of your report if any items were corrected or removed.

1. Dispute Inaccurate Items Yourself

You can embark on DIY credit repair by ordering your three credit reports from AnnualCreditReport.com, a source of free credit reports authorized by the federal government. You need all three reports (one from each credit bureau, Experian, TransUnion, and Equifax) because creditors may report transactions to only one or two credit bureaus.

After receiving the reports, review the four sections for errors:

  • Identification: Information identifying yourself, including your address, date of birth, and Social Security number. Incorrect information may be a tip-off that the report covers accounts that don’t belong to you.
  • Tradelines: This contains your account data, which includes your use of credit and your borrowing activity. The data includes account balances, payment history, and a collection account or charge-off.
  • Public records: Court information regarding adverse legal judgments, bankruptcies, liens, foreclosures, vehicle repos, and money owed for child support.
  • Inquiries: Hard inquiries are those you authorize a credit provider to make when you apply for a credit card or loan. These can lower your credit score. Unauthorized soft inquiries have no impact on your score.

The hardest part of DIY credit repair is combing through your report data for accounts or account activity you don’t recognize, incorrectly reported negative credit file items (charge-offs, delinquencies, bankruptcies, etc.), and liens and judgments you have already paid. You also should check for hard inquiries you didn’t authorize.

If you come across inaccurate information, lodge a dispute via the credit bureau’s website, over the phone, or by mail. You should receive a written decision about a dispute within 30 days. Disputes settled in your favor may take a while to affect your credit file. If you don’t see the item removed or corrected after two months, follow up with the credit reporting company.

You have the right to resubmit dispute judgments that went against you — but only do so if you have additional evidence to present. If you overdo it, the credit reporting company can mark the dispute as frivolous and ignore it.

You can attach a 100-word statement to each disputed item remaining on your report, explaining your position in detail, and backed with evidence and facts. While the statement won’t help your score, it gives creditors more context when they evaluate whether to grant you credit.

3. Send a Pay for Delete Letter to Your Creditor

Your credit score suffers when your credit report contains derogatory information (e.g., late payments, unpaid or paid collection events, charge-offs, debt settlements, etc.). You can negotiate an item’s removal with a debt collector by using a pay for delete letter. It may not work, but it’s certainly worth a try since it is a legal request.

The gist of a pay for delete letter is an offer: You’ll pay some or all of the amount you owe, after which the collector will remove the derogatory item from your credit report. That’s a win-win, as an item hurting your credit score is removed, and your collector receives at least some of the money you owe.

Pay for Delete Letter

Photo credits: Lexington Law

Procedurally, you should first request a debt validation letter from the collector verifying it has accurate information about your debt. You can request the letter within 30 days of the initial contact from the collector. If the letter reports accurate debt (i.e., the amount owed, the identity of the original creditor, etc.), you can then follow up within the next 30 days with a pay for delete letter.

However, if you don’t recognize or agree with the debt in question, you can request the collector to prove you legally owe the money. If it cannot provide proof, it must drop its collection account request. This won’t automatically remove the item from your credit report, but you can request that as part of the dispute.

You don’t have to reinvent the format for your verification request letter or a pay for delete letter. You’ll find many sample templates on the internet that are freely available or sell for a nominal price.

Bear in mind that creditors are under no obligation to remove negative information from your credit reports when you pay off a delinquent debt. On the other hand, collectors often buy your debt for pennies on the dollar and may be all too happy to collect at least part of what you owe.

4. 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 requests work best when you have a long and positive relationship with the creditor. Naturally, you’ll 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 bureaus. 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 you’ll never do it again.

Goodwill letters are usually less successful for more serious transgressions, such as collections and repos.

5. Wait for the Items to Age Off Your Reports

You should know two things regarding the effects of negative information on your credit score:

  1. The damage to your score is strongest in the first two or three years, after which the impact begins to fade.
  2. Items must be removed from your report after a set period of time. Once removed, they play no part in determining your credit score.

The following chart summarizes the maximum time a negative item can remain on your credit report.

Chart Showing Time Items Take to Age Off a 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 (with the possible exception of student loan debt) 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 bureaus 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.

Illegal Tactics to Avoid

Unfortunately, scam artists may try to sell you an illegal credit repair strategy. If you fall for a credit repair scam, you’ll likely end up losing money and possibly open yourself up to civil or criminal charges.

One popular credit repair scam involves credit profile numbers (CPNs), which are nine-digit numbers formatted identically to Social Security numbers (SSNs). In fact, they are often SSNs that have been stolen or otherwise illegally obtained. Scammers may charge hundreds or thousands of dollars for a CPN.

Here’s the tactic: You are supposed to use a CPN instead of your regular SSN when filling out a credit application. You also may be told to give a phony name and address. This is a strictly illegal way to create a false identity with no connection to your existing credit history.

Using CPNs exposes you to charges of identity theft and misrepresenting your SSN, which is a federal crime. Even if you have bad credit, going to prison for using a CPN is definitely not worth it.

A variation on the CPN scam is to use Employer Identification Numbers (EINs), which are like SSNs for companies. While EINs are legal numbers when used properly, they are not substitutes for SSNs on credit applications. It is illegal to obtain an EIN under false pretenses.

Another scam is to hire a corrupt credit counselor to add false information to your credit reports. The credit counselor creates phony creditors and lenders along with fabricated transactions to make your report look more attractive. This too is a crime.

Never be tempted to employ illegal practices to try and fool a creditor. You’ll likely be caught and have to suffer the consequences.

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 don’t 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 you’ll have to devote some time to the process. Alternatively, you can pay credit repair companies to do the job for you.

Credit repair companies are better positioned, have superior knowledge, and can usually complete the job for under $1,000, sometimes considerably less.

What Happens When an Item is Deleted from Your Credit Report?

Whenever your credit report is altered because of a dispute lodged by you or a credit repair service, the credit bureau must inform you in writing. You are then entitled to a fresh copy of your credit report from the bureau.

Many credit cards offer free alerts that inform you whenever your credit score changes. Thus, if an item deletion results in a change to your score, your credit card company may be the first to inform you of the good news. You also may get a free fraud alert service.

FICO® Score Range

You should see your credit score improve when negative items are removed from your reports. How much it improves, however, depends on the type of item that is removed and its age.

The credit bureau must send you written results about your dispute, which usually arrive within the initial 30-day window. If the results are favorable, you can instruct the bureau to notify anyone who received your report in the past six months.

How Long Does it Take to Remove Something from a Credit Report?

It can take several months for an item to be removed from your credit report as the result of a dispute settled in your favor.

When you register a dispute, the credit bureau and creditor have 30 days to respond. If the response is favorable, it can take another two months or more for the item to disappear from your report.

Since the same negative item can appear on the credit reports issued by three different bureaus, removal times may vary. If your original dispute fails, you have the right to resubmit it with additional evidence. This can add another month to the process.

How Many Points Will My Credit Score Go Up When a Derogatory Item is Removed?

The impact of an item deleted from your credit report depends on whether the item was negative, such as inquiries, late or missed payments, write-offs, collections, bankruptcies, settlements, liens, and foreclosures.

The impact of these deletions can range from a credit score increase of a few points (for inquiries) to hundreds of points (for bankruptcies). Deleting a negative item is like removing weight from your score, allowing it to rise.

The impact on your score as a result of removing a negative item depends on the severity and the age of the item. Inquiries are not severe problems, so removing them will have, at best, a minimal impact on your score. Other items are more severe, so removing them could add dozens of points to your score.

The other factor is the item’s age. The impact of removal will always be greater if the item is relatively recent.

Even severely derogatory items begin to lose their bite after a couple of years. The impact of an item aging off your report will be muted because the negative effects have already eroded over time. Nonetheless, you should see your score rebound whenever a negative item is removed.

Is it Better to Pay Off Collections or Wait?

From the viewpoint of repairing your credit score, it’s better to pay off a collection sooner rather than later, assuming you can afford to do so. However, a paid collection will only help your credit score if the collector agrees to remove the item from your credit report. Short of that, paying off a collection may have no effect on your credit score.

As explained above, you may have bargaining leverage with a collection agency. This manifests when you submit a pay for delete letter that offers to pay the debt in return for removing the collection item from your credit report. Your offer may be for the full amount owed, but you can request a partial write-down of the balance due.

For example, suppose you had a $10,000 credit card balance and were unable to make payments. Eventually, the card issuer wrote off your account and sold it to a collection agency for 20 cents on the dollar. The issuer collected $2,000, which means the collection agency must collect at least that much just to break even.

The fact that your original debt was $10,000 may be less important to the collector than to the credit card issuer. If the collector were to collect, say, $4,000 on the debt, it would rack up a gross profit of 100%. Therefore, the collector may be willing to accept a pay to delete deal.

Once you pay the $4,000, the collector will remove the item from your credit report, and your score should see some improvement. The sooner you can arrange this outcome, the faster your score will recover, with positive implications for your lifestyle.

That is, a higher score will improve your access to credit and lower the amount of interest you’ll be charged. A higher credit limit will reduce your credit utilization ratio.

FICO Credit Score Factors

If your collection account is paid and removed from your credit reports, it will lower the balance you owe and improve your payment history, which will improve your credit score. If it is not removed, paying your account in collections may have no impact on your score at all.

But what if the collector refuses to remove the item from your credit report? Paying off the collector may be good for your soul, but it won’t help your credit score.

In that sorrowful case, you would, at best, be able to append a 100-word note to the item informing report recipients that you paid off the collection as of a specified date. True, it won’t help your score, but it may make a favorable impression on future decision-makers, including lenders, employers, and landlords. Paying off the collection clearly demonstrates your resolve to re-establish your creditworthiness.

If you simply don’t care about your credit score, waiting to pay off the collection will allow you to keep the money you owe for a longer period. Even if you never repay the collector, the negative item will age off your credit report in seven years. If you are already several years into the collection, you may choose to ignore the collector and let the item age away.

Of course, your collector may take a very different view of the situation and haul you into court to grab the money you owe. This is a fresh opportunity to cripple your credit score because a court judgment against you and/or a forced bankruptcy will add additional negative items to your report.

If a collection is accurately reported on your credit report, a dispute (whether initiated by you or a credit repair service) won’t remove it. The only ways to get rid of a bona fide collection is to successfully negotiate a pay for removal agreement or for the item to age off after seven years.

How Do I Remove Negative Items from My Credit Report for Free?

You can remove negative items for free, but you’ll have to invest some sweat equity in the form of time and attention. If you’re watching every penny, it’s good to know you can get your credit reports and submit disputes for free.

You start your cost-free DIY odyssey by ordering a free credit report from AnnualCreditReport.com. This source is authorized by the federal government to give you a free annual credit report from each consumer reporting company: Equifax, TransUnion, and Experian.

Credit Report Evaluation Infographic

If after scouring your reports you identify items you wish to dispute, you can do so for free online, thereby saving the cost of paper, ink, and postage.

Because you’re going it alone, you’ll have to do the record-keeping and dispute tracking that a credit repair service would have done for you. This will take up your time, but you needn’t shell out any money to do the job.

Perhaps you would like to make the job easier by spending just a little money. If so, consider a software package as an alternative to support from a credit repair service. For example, Credit Versio offers software-as-a-service for less than $20 per month that supports consumers who wish to dispute items on their credit reports.

The Credit Versio package has provisions for importing your credit reports and helping you identify items for potential dispute. The software can help you generate professional-looking dispute letters and provides $1 million in identity theft insurance. If you become a victim of identity theft, you’ll want to request a credit freeze.

Credit repair services can range from about $80 to $150 a month. As mentioned earlier, these companies aim to have you subscribe for at least six months, so costs may run anywhere from $300 to $900 for the period. That’s how much money you’ll save if you do it yourself.

Is Pay for Delete Illegal?

The Fair Credit Reporting Act (FCRA) sets the rules for credit reporting as it applies to creditors, debt collectors, credit counseling organizations, and credit bureaus. The FCRA does not contain any language banning pay for delete, so it’s legal.

But before you get too excited, bear in mind that you can deploy pay for delete only on items that are incomplete or inaccurate. The FCRA’s scope means you can’t have accurate items removed from your credit report. If you try to use questionable techniques to remove accurate items, you may, in fact, be breaking the law.

Any pay for delete agreement you reach with a debt collector should be documented in writing in case you need to enforce the deal. Normally, you must first pay off the debt before the collector will remove the item, so a written agreement is required to ensure compliance.

Understand that without the agreement in place, the collector is under no obligation to remove items from your credit report, but they’re also not under any restriction to do so.

Can Disputes Hurt Your Credit?

There is no reason for a dispute to ever hurt your credit. At worst, it may have no impact on your credit score.

However, your score should rise if a dispute successfully results in the removal of derogatory items from your credit report.

Perhaps the only negative outcome from a credit dispute occurs when consumers abuse the process by submitting frivolous challenges. Eventually, a credit agency will recognize this kind of abuse and just ignore your dispute submissions.

Like the boy who cried wolf, this can come back to bite you when you suffer from a real credit report error.

Do Credit Bureaus Really Investigate Disputes?

The credit bureaus hand off investigations to the original creditor that furnished the disputed information.

That is, when you dispute a late payment on a credit card, the credit reporting agency will forward your dispute to the credit card issuer for investigation. All this must be completed within 30 days of the dispute’s submission date.

Credit Bureau Logos

The bureaus notify creditors of your dispute, and they, in turn, must provide evidence of the item’s legitimacy.

Perhaps there could be cases in which a credit reporting agency investigates a dispute directly. These cases may arise, for instance, if data was correctly distributed by a creditor but was corrupted in the systems of the credit agency.

You Have Options to Legally Remove Items from Credit Report

It won’t cost you anything to have a free consultation with one of our top-rated credit repair services. This process can, at the least, tell you where your reports stand and whether its services can help you legally remove items from your credit reports.

Knowing which items you can legally dispute will give you an idea as to whether you can go it alone or you’d feel more comfortable enlisting a service. Check out Sky Blue Credit Repair’s money-back guarantee if you’re wary of spending money on a credit repair company.

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