Learn how to dispute negative items on your credit report and win.
Removing adverse trade lines can boost your credit score quickly. Better ratings will benefit your finances in many ways.
By law, the consumer reporting agencies (bureaus) must promptly delete any erroneous data appearing on their files. Each information category (late payments, collection accounts, public records) has unique weak links that lead to mistakes.
Therefore, the winning strategy rests on learning each weakness. Then write dispute letters that target these problem areas and send them to the right entity.
Removing Late Payments From Credit Reports
Successfully removing late payments from credit reports involves a direct strategy because the data furnisher is the original lender. However, disputing something does not mean the negative information will come off or your file – or stay off.
You need to prioritize which erroneous delinquencies to dispute and adopt unique tactics for items before and after the 7-year expiration.
Stay on Report
Late payments stay on your credit report for 7 years counting from the date of first delinquency for the account. However, a one-day late payment will not appear on your file. Banks and lenders document only 30-days overdue events or greater, which affect your credit score based on their recency and severity.
- Recency: how long it has been since you were overdue
- Behind now: higher impact
- Behind in the past: lower impact
- Paid charge off
- Paid collection
- Paid judgment
- Severity: the number of days late on the account
- 30 days overdue: lower impact
- 90-days overdue: higher impact
- Highest impact items:
The number of points your score will go up once these derogatory items disappear varies. Deleting hard inquiries rarely makes a lasting or meaningful difference. Therefore, prioritize the most recent and severe late payments for removal.
Before 7 Years
Removing late payments from your credit report before the 7-year expiration date is possible. You can achieve this yourself by focusing on two key concepts.
- Document why the delinquency is a mistake
- Direct the dispute to the company who can fix the error
- Mistaken identity issues occur at the bureaus (reporting agency).
- Late payment errors occur at the lender (data furnisher).
Dispute letters need to document in detail why the late payment is an error and go to the entity responsible for the mistake. Correcting the problem at the source is the key.
The Consumer Financial Protection Bureau provides sample dispute letters for both data furnishers and consumer reporting agencies. You will find phone and fax numbers, online portals, and address information all in one place.
Letter to Data Furnisher
Direct a late payment dispute letter to the data furnisher (bank, credit card company, student loan servicer, mortgage servicer) as your first step. You need to correct the mistake at the source before it can appear accurately on your file.
Otherwise, any bureau-sourced investigation will only confirm what already displays.
Late payments on a student loan are easier to dispute because of the many repayment options (REPAYE, PAYE, IBR, ICR, deferment, and forbearance) create confusion and opportunity for mistakes. Make sure that your letter specifies how changes in repayment status relate to the error.
Letter to Credit Bureau
Direct the late payment dispute letter to the credit bureau for identity mismatch issues and possibly after correcting the mistake at the source.
- Wrong Person: The bureaus make educated guesses about which trade lines belong to which consumers. They use identifying elements (name, address, social security number, date of birth) to decide what trade lines to display on a file. These elements are often missing, and/or contain anomalies (transpositions, misspellings, abbreviations, etc). Your letter should specify which identifying elements point to a different person.
- Source Corrected: The data furnisher should communicate the corrected payment information during the next 30-day update cycle. Sending a dispute letter to the bureaus does not help your cause and wastes your time – unless the update does not reflect the modifications.
Response Time Limit
In general, the consumer reporting agencies have 30 days to perform an investigation. This research determines whether the disputed information was inaccurate and records the status of the account. If they cannot confirm the accuracy within 30 days, they must delete the negative item.
Many repair clinics flood the agencies with disputes of accurate information. This scheme hopes to trigger a deletion based on exceeding the 30-day time limit. The bureaus often ignore these requests or put them back on shortly after.
Under the FCRA, the consumer reporting agencies have the legal right to ignore frivolous and irrelevant disputes of accurate information. Two common reasons allow them to ignore many requests.
- Failure to provide sufficient information
- Repetitive filings with no additional documentation
Put Back On
Once the agency deletes something your credit report, the bureau can put it back on if the furnisher later confirms that the information is complete and accurate. The FCRA specifically allows reinsertion of a previously deleted item when correct. The agency must notify the consumer within 5 days of the reinsertion.
After 7 Years
It should not be necessary to dispute items on your credit report after 7 years. The bureaus automatically delete any late payment information 7 years after the date of first delinquency.
However, mix-ups in date of first delinquency date can cause the derogatory item to display longer. This happens when you have a late payment displaying on file, bring the account to current, and then become late again. The date of first delinquency resets to the second (later) time you were 30-days behind on that account.
Make sure that you have a clear understanding of these dating rules before filing this type of dispute. Provide documentation showing that you never brought the account back to current (copy of statements and dunning notices.
Removing Collection Accounts from Credit Reports
Removing incorrect collection accounts from credit reports requires the second strategy. Collection agencies are not the original data furnisher. Therefore, you need to employ dispute tactics that target data transfers issues in order to be victorious.
Collection agencies rely on data provided from other sources such as the original lender, other agencies, and insurance companies. These constant data transfers lead to common errors, which you can exploit.
Remain on Report
Paid and unpaid collection accounts stay on your credit report for 7 years after the date of first delinquency. The date the agency first noted the account does not matter.
Gleaning data from a related charge-off works better than claiming “no contract” or “pay for delete” does.
Charge-off means the lender closed the account for further use – although you still owe the money. Per Experian, the original lender will continue to note the charge off with the first delinquency date, and the account number. You can use these two elements to remove related paid and unpaid collection accounts.
- Both the charge off and collection account should expire at the same time. If not, use the date of first delinquency to dispute any connected trade lines that still display.
- Duplicate collection accounts crop up when the agencies buy and sell receivables. Use the account number associated with the charge off to dispute duplicate entries. Only the most recent should display.
When a collection agency sells your receivable, you may have no written contract with the new company. However, you still owe the money to this new entity.
Likewise, filing a no contract dispute with a consumer reporting agency is unlikely to result in deletion – unless the account number does not match the related charge off (see above).
Pay for Delete
“Pay for delete” letters are a shady way to remove collection accounts from your credit report. The agencies have a contractual obligation with the bureaus to document entries accurately and honestly.
Most legitimate collection agencies will not offer or accept “pay for delete” letters. If they do, it is doubtful they can deliver on the promise to erase the entry in exchange for payment. Avoid this practice.
The National Consumer Assistance Plan (NCAP) details a possible way to remove collection accounts from credit reports without paying. The NCAP is a joint initiative between the big three consumer reporting agencies (Equifax, Experian, and TransUnion).
They make this statement on their highlights page:
“Require debt collectors to regularly update the status of unpaid debts,
and remove debts no longer being pursued for collection.”
What is the best way to get a collection agency to stop pursuing debt? Refuse to pay, ignore their calls, or deny that you owe the money until they give up! Of course, this approach works best for smaller amounts.
Getting medical bills in collections removed from your credit report involves yet another strategy. As per NCAP, the consumer reporting agencies must follow specific rules for medical debt.
- A 180-day waiting period before the unpaid medical bills can appear
- Delete any trade line ultimately paid by the consumer’s health insurance plan
Therefore, you can dispute any medical collection account that fits either of these criteria. Expect to win every time. Make sure to attach a copy of the explanation of benefits from the insurance company with your letter. The explanation of benefits shows the date of service, date of payment, and the payment amount.
Removing Public Records from Credit Reports
Removing public records from credit reports requires the third strategy because of a class action lawsuit settlement reached in early 2018. The settlement directly affects civil judgments and tax liens and sheds light on how to dispute bankruptcies successfully.
The settlement reminds us that the bureaus can only make educated guesses about which trade lines belong to a certain consumer. The identifying elements rarely match 100% because of the many anomalies.
Civil Judgements and Liens
Removing civil judgments and tax liens from credit reports should be relatively easy – for now. Under the legal settlement, the three main bureaus agreed to delete these public records from their files beginning April 2018.
They will not resume displaying judgments and tax liens until January 1, 2020, at the earliest. At this time, any new records must meet minimum standards for identifying information to ensure a conclusive match with the consumer.
- First and last name
- Full date of birth (day, month, and year)
- At least 4 digits of the social security number
Read between the lines. County courthouses are notoriously unreliable record keepers – especially around identifying information. File a dispute on the basis that the judgment or tax lien pertains to another person.
Bankruptcies display on your credit report for 7 years (Chapter 7) or 10 years (Chapter 10) counting from the court filing date. The court filing date is often years after you first started having trouble paying your bills.
- Removing accurate bankruptcies early is very difficult. Take solace in the fact that some lenders are more likely to approve consumers with bankruptcies because they cannot file again for another 7 to 10 years.
- Sometimes bankruptcy can appear on your file in error. This can happen when a court filing contains identifying information similar to yours. File a dispute based on mistaken identity.