Getting rid of collections or old debt on a credit report can be incredibly challenging. Although it has been estimated that over 78% of credit reports have errors, there is very little incentive for a company to remove innaccurate or false information from your report. If you still want to try to get things removed, however, follow a good plan. A sample of one that I have used with my clients is below.
1. Get copies of all three of your credit reports. You’re entitled to a free copy of each one every year at www.annualcreditreport.com. Read through each report, and make a list of inaccurate and false information. Make a separate list of items that are true, but that you want to fix.
2. Take the first list and respond to each of the items through the reporting features on annualcreditreport.com. Explain the actual circumstances, and refer to any proof you may have (letters stating the loan was paid off, credit card statements, etc.). Lenders have up to 30 days to respond, but most will respond almost immediately by stating that what they reported was correct. Your response will stay on your credit report for any future lender to read, however.
3. For items that are not affecting your score too much, move on. The amount of time you spend fighting will not be worth the small gain to your score. For big errors, contact the lender directly. Expect to spend about 10-15 hours on the phone trying to clear up each problem.
4. Take the second list and prioritize the items by how much they are affecting your score. Please realize that it is very hard to remove any correct information, but you can try. First off, ignore anything that is older than 6 years. Everything will drop off the report after seven years, and it will probably take more than one year to remove it by going through the lender.
5. If you just have to get something off your report, start by contacting the lender. Most of the time the account will have bounced through several collections agencies, and it will take time to figure out who owns the account. A lot of times the information for the agency given on your report is wrong, but it can be a good place to start. The question to ask is, “How much would you be willing to accept to remove the bad report from my credit report?”. Once they quote you a price, you can negotiate. Most debt collectors bought the debt for a very small percentage of the original loan. If they won’t take the information off your record, remind them that you see very little point in paying them anything, tell them you’ll just wait for the statute of limitations to run out.
6. Once you reach an agreement, make sure you have it in writing before going any further. Don’t send them a penny until you have a written agreement that they will remove the bad report from your credit.