Understanding Credit

How To Deal With Negative Credit Report Information

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Receiving a negative credit report can be devastating. A good credit score is essential for so many of the financial needs one has in life. A low score can affect the interest rates a person gets when taking out a loan, particularly for a house or car, it can raise insurance rates, and it can even affect whether one is hired for a job. Many of the details on a credit report, like late or missed payments, can stay on the report for up to seven years, causing numerous financial struggles. Fortunately, there are ways to deal with a negative credit report and raise one’s credit score over time.

Federal law specifies how long negative information may remain on your credit report. To prevent you from being penalized for past credit mistakes forever, the Fair Credit Reporting Act regulates that negative information, so it can only be reported for seven, ten, or fifteen years at the most. This includes bankruptcies, late payments, accounts that a creditor turned over to a collection agency, tax liens, and judgments filed against you in court – even if you later paid the account in full.

A hard inquiry can remain on your report for two years. Most judgments will stay on your credit report for up to seven years or until the statute of limitations runs out, whichever is longer. However, with unpaid tax liens, it could be up to fifteen years. The date of filing for a public record or date of the first missed payment is what the credit bureaus usually go by when removing or keeping information on your credit report.

The length of time a bankruptcy remains on your credit report depends upon which chapter you file. A Chapter 7 bankruptcy will remain on your credit report for up to ten years. Chapter 13, by the policy of the credit reporting agencies, remains on your credit report for up to seven years.

You should check out your credit report frequently, and fix any problems as soon as possible. Sadly, when you don’t do this, there is a possibility that you will pay higher interest rates on everything from credit cards to car loans to insurance policies.

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Tips On How To Deal With Negative Credit Report Info:

Check Your Credit Reports Often –

Often, a consumer will run out and get a “free” credit report from bogus places like freecreditreport.com that will charge you a monthly fee of $19.99 and don’t even show all three credit reporting agency’s information. Instead, you should go to www.annualcreditreport.com to get all three of your credit reports for FREE from consumer credit reporting agencies: Experian, Equifax, and TransUnion (this service is free through Federal Law). Under the Fair Credit Reporting Act (FCRA), you have the right to request a free report within 60 days if a company denies you credit based on the report.

When you look at all three credit reports from the different bureaus, you’ll get the full picture and will not have any bad surprises in the future. Remember, every credit bureau will have different information, and it is up to the consumer to understand this and get any errors or mistakes resolved ASAP.

Verify Information –

Sometimes, a credit bureau will report inaccurate, outdated, or blatantly incorrect information. In most cases, this is not in the consumer’s favor as most errors are in favor of the creditors or lenders. Other times, all the debts are valid, and one must pay them off or come up with a plan to fix the issue. Either way, when verifying that debts are legitimate and accurate, a consumer will have an easy time proceeding to deal with and fix the problems if that person has valid proof and can provide said proof to the credit reporting agency.

Ask For Errors To Be Removed –

If any of the information on one’s credit history is inaccurate, one can dispute it and get it removed. Credit issues should go away after seven years, but in some cases, it does not. One may have to involve the credit bureau or the creditor that was owed. In extreme cases, an attorney may be required to help get the negative information removed.

If the information is correct and within the time frame of seven years, the business does not have to remove it, but there are still some ways to get it taken off. A person can begin by paying any bills they have missed. Sometimes a business will take off the negative report if the payment is made, especially if this is the first time the mistake was made. Other times a person may write a goodwill letter, which is a letter requesting that the business remove the negative details. Remember that businesses do not have to remove any accurate information, but some are willing to in exchange for payment of past due bills.

A person who finds incorrect information must contact the creditor and that credit reporting bureau to fix the problem permanently. To get to the bottom of the issue quickly, consumers should keep records of all the information and send it to the creditor and credit bureau that is reporting the error. When doing this, a consumer should make sure to send everything via certified mail and keep notes and copies of all phone conversations and correspondence. This will allow a person to prevail and should help raise his or her credit score when the error is finally removed.

Of course, it is up to the consumer to verify the information and wait a few weeks or even months to run his or her credit report again. If everything checks out, then that consumer should enjoy a higher credit score. However, if the problem has not been resolved, the consumer will have to contact both the creditor and credit bureau again and perhaps multiple times to resolve this pressing issue.

Beware Of Scams –

There are companies everywhere that promise to help repair bad credit, and it can be tempting if someone is desperate to get their report fixed. Of course, these companies all charge a fee. Unfortunately, there is no easy fix for a bad credit history. It takes a long time and hard work. If a company’s promises sound too good to be true, it probably is. These companies can wind up making a person with financial troubles spend money on their fees and can do little to change a credit score.

Work On A Budget –

If a person has a bad credit history, he or she will want to avoid remaking the mistakes that led them to the issues in the first place. One of the most critical steps in repairing credit is working out a budget that can keep a person out of debt. It is important to make cuts wherever necessary and use any excess money to pay back debts.

Credit Cards –

While credit errors may not be removed from one’s record for up to seven years, over time a person may begin to get offers for credit cards and lower interest rates. If one is in a position to pay back a credit card, accepting one of these offers can help their score. Proving that one can regularly pay back a credit card can help improve a score over time. As the score is improved, offers with better interest rates will come. One should remember to only use this option if capable of paying off the card on time each month. Late or missed payments will only cause more damage to the score.

Don’t File For Bankruptcy –

Bankruptcy should always be avoided and only used as a last resort to settling financial woes. One should never file for bankruptcy in an attempt to repair credit errors. While bankruptcy will set debt to zero, missed payments and other negative records will still appear on the report. Also, bankruptcy can take up to 10 years to be removed entirely from a person’s credit history.

Wait It Out –

Unfortunately, the last option is to wait it out. After seven years, the negative details will be gone from the credit history. It could take up to ten years if bankruptcy was filed. Once the negative marks have been removed, one can begin to rebuild his or her credit.

Conclusion –

Dealing with negative credit report information is never fun, and it is definitely stressful, but it’s also vital to obtaining and keeping a good credit score. With these helpful tips, anyone should be able to fix their credit score and get to the bottom of any credit reporting issues. Thankfully, this will allow a person to borrow money at a lower interest rate in the future, and enjoy a more secure financial state of affairs. Don’t put off reviewing your credit reports! You should always try to fix any errors. Errors have more of a negative impact than you might think.

We offer a Credit Report Review Service if you feel that you need some help with obtaining and reviewing your credit reports. It can be confusing, but we are here to help you! Contact us about our Credit Report Review Service today to learn more information.

Author: Lauralynn Mangis
Lauralynn is the Online Marketing Specialist for AdvantageCCS. She is married and has two young daughters. She enjoys writing, reading, hiking, cooking, video games, sewing, and gardening. Lauralynn has a degree in Multimedia Technologies from Pittsburgh Technical College.