How to Remove Negative Items from your Credit Report

Bad credit can come back to haunt you. A history of late payments or unpaid debts can make it hard to buy a home, rent an apartment, or get a car loan. In fact, bad credit might even mean higher bills: bill providers are legally allowed to charge you more for having poor credit.

It doesn’t have to be this way, though. With a little homework and effort, you can nip your bad credit in the bud. The first step? Addressing the negative items on your report.

Step 1: Review Your Credit Report

Man using his computer
Before anything, you want to obtain a copy of your credit report. The good news is, it’s free, and it’s as easy as navigating to AnnualCreditReport.com and requesting it. You’re allowed one free copy of your credit report each year from each of the three major credit bureaus: TransUnion, Equifax, and Experian. It’s important to keep an eye on all three, because sometimes there are discrepancies between them. For instance, your Experian credit report might have an error while your TransUnion and Equifax reports are perfectly accurate.

Once you get your copy, you’ll find an entire section dedicated to any and all negative items. These are the accounts dragging your credit down: outstanding credit card debt or an old utility bill you never paid, for example. These negative items are the accounts we want to fix.

According to Experian, here’s how long six common negative items stay on your report if you aren’t able to remove them:

  • Collection accounts: seven years after the first delinquency
  • Late payments: seven years from the first late payment, even if you’ve caught up and the account is current or closed
  • Chapter 13 bankruptcy: seven years
  • Chapter 7 bankruptcy: 10 years
  • Paid tax liens: seven years
  • Unpaid tax liens: 10 years

Rod Griffin, Director of Public Education at Experian, explains that these negative items have less of an impact over time:

It’s prudent to pay the money you owe, but if you’re struggling to make ends meet, you should consider how long you have until your own negative items drop off your report. It’s not ideal, but you may be able to live with them on your report for the time being, provided you don’t need to use your credit in that time frame.

Step 2: Look for Errors and Dispute Them

Reading with a magnifying glass
Once you’ve reviewed your potentially negative items, first make sure there aren’t any mistakes. There are a handful of different types of errors you should look for on your report:

  • Accounts that don’t belong to you
  • Negative items that have expired but haven’t yet dropped off the report
  • Personal information errors
  • A paid off account that’s still listed as unpaid

If you do find an error, you’ll first want to notify the creditor. The Federal Trade Commission makes the process really easy with this sample letter. Fill in the blanks, then send the letter to the creditor, along with any documentation supporting your dispute. They’re obligated to investigate the items in question, usually within 30 days. If they agree that there’s an error, it’s their job to notify all three credit bureaus so they can fix your report. You can also request to have them send notifications to any agency that’s pulled your report within the past six months.

If they don’t think there’s an error, you can at least ask for a notification of dispute to be included on future reports. You can also dispute with the bureaus directly, and they make it fairly easy. Experian, for example, lets you directly dispute those errors using their online form.

“If you have a recent copy of your personal report you can simply enter the report number and begin disputing information,” Griffin says. “If you do not have a copy of your personal report, you can provide the information requested and Experian will provide a copy instantly online at no cost. Each account entry has a ‘dispute’ button with it. If you wish to dispute information simply click the button and follow the instructions.”

After getting your letter, the bureaus will then contact the creditor themselves to investigate, a process Griffin says usually takes Experian 10 to 14 business days. But generally, getting an error totally removed from your report can take anywhere from a month to a few months. Of course, you should check your report after the fact to make sure the item has been removed or updated.

What if the account is already in collections?

Erasing mistakes
In another scenario, let’s say you’ve successfully disputed an item with the creditor, but they’ve already sent your info to collections. A debt collection company keeps calling you, asking you to pay money you don’t owe. If this happens, you can actually file a complaint with the Consumer Financial Protection Bureau.

Step 3: Try Removing Negative Items that Aren’t Errors

On the other hand, let’s say you’ve made some mistakes. You couldn’t afford to pay your credit card bill. Your student loan payments are sometimes late. Of course, the ultimate solution is to improve your financial habits; that much is obvious. In the meantime, though, you still have options for dealing with the negative items on your report.

For late payments, you can draft a “goodwill letter,” which is sometimes referred to as a “goodwill adjustment.” If you generally have a good history with a creditor, they’re often willing to forgive a late payment here and there and update your credit report accordingly. You’ll want to contact the creditor directly, either with a phone call or a letter. Either way, your request should include:

  • A brief rundown of your history with the creditor
  • A brief explanation of the financial hardship that led to your late payment
  • A request to remove the negative mark from your credit report

Of course, if you have a long history of late payments, that’s another story. If you have the money, you might be able to negotiate a payment plan with them that includes paying a large lump sum amount in exchange for removing your negative marks. Griffin recommends calling your creditor to discuss your options, and reminds us that the removal of negative, accurate information is unlikely.

“The best thing to do is to catch up on the late payments, bring the accounts current and continue to make your payments on time. The late payments will eventually be deleted in accordance with the time frames specified in the Fair Credit Reporting Act. If you are unable to do so, discuss options with your creditors. They may be able to work with you to change the account payment due date so that you are able to make the payments on time.”

Beware of Debt Settlement or Consolidation

In general, pursuing debt settlement or debt consolidation is not a great idea. Most of these companies are pretty sneaky and some of them don’t even have any contact with your original creditor. Worst case scenario: you pay the company, never hear from them again, and the negative item is still on your report. If you’re considering going with one of these companies, you’ll want to keep a few things in mind:

  • Fees and sneaky, rigid contracts: Most of the time, they’ll charge you a fee for settling. Worse, if you miss a payment as part of your settlement or consolidation plan, you could lose all of your money—none of it will go toward paying off your debt.
  • Taxes: When you settle for a lower amount, that means a portion of your past debt is forgiven. And anytime your debt is forgiven, you’ll owe taxes on the amount forgiven if it’s over $600.
  • Longer terms: You can actually pay more over time with debt consolidation. All it does is stretch out the length of your debt. Your monthly payments are smaller, but at the expense of paying more interest over time.

There’s also an important distinction to be made here: debt settlement and consolidation are not the same as credit counseling. The former options, along with the credit repair industry, promise to simply erase your delinquencies–and usually at quite a cost–while the latter helps you build better habits to improve your credit over time.

“There are many excellent credit counseling services that can help you budget more effectively and who can work with your lenders to assist with debt repayment as well. Don’t be afraid to ask for help,” Griffin says. “Be very careful about working with any organization that promises to remove accurate but negative information from your credit report, especially if they ask for payment up front.”

Credit Repair Tactics

While improving your credit score takes time, there are a few legit tips and tricks that can help you along the way.

Again, as Griffin suggests, you can catch up on missed payments by working out a hardship payment plan with your creditors. Simply give them a call and ask what programs are available. You might be surprised at their willingness to work with you–creditors would rather you pay as much as you can than nothing at all.

Also, credit utilization makes up nearly a third of your credit score, so it helps to focus on this area. In basic terms, your credit utilization is the amount of credit you have available to you versus how much of it you’re actually using. The lower your credit utilization, the better. This means if you open up a new line of credit, it should boost your score, assuming you don’t actually use that credit (and after you account for the inquiry and the lowering of your average age of accounts). Problem is, when your credit isn’t great, it’s hard to open up new lines of credit. There are a few ways to get around it, though.

A secured credit card might be an option. These require you to deposit a large sum of money, which acts as collateral if you miss a payment.

If you have a parent or spouse with solid credit, you might consider asking them to add you as an authorized user to their credit card. Provided they haven’t racked up a bunch of debt on that card, this gives you a new line of credit.

You also may want to avoid closing accounts that you’ve had open for a long time. Not only would this reduce your credit utilization, it also affects your credit history, which makes up a big part of your score, too.

Improve Your Credit Habits

In general, the best way to improve your credit is to work on your financial habits. There aren’t many reliable “fixes” for credit mistakes, so it’s best not to make them at all. Even if the outlook isn’t bright, you can take control by making a list of your negative items, and then deciding on the best course of action, one item at a time. It may not be the fastest method, but it’s effective.

Kristin Wong writes and makes videos about all things money. You can find her writing at Lifehacker, NBCNews.com, and on her own personal finance blog, Brokepedia.

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16 responses to “How to Remove Negative Items from your Credit Report”

  • C. Loch

    I had a couple of accounts in collections, and have them all paid off, and they are listed as account paid. Can i get those off my credit report, niw that they are paid off?? And also had a bankruptcy 3 yrs ago, any chance of that getting removed as well?

    • Thomas Bright

      There are stipulations for how long they remain, but there is good news here. Newer scoring models are giving you credit for paying off collections accounts, so those won’t hurt your score as much as they used to.

  • I just received letters back from expedían and equifax. This is my first dispute. And none of my four accounts were removed. The accounts have been more than 6 years ago. Any tips?

    • Thomas Bright

      Elsa,

      I wish I could be more help, but it’s hard to say without knowing more about your specifics and the details of the negative marks. You could try chatting with our counselors, who could take a closer look.

  • Ms Johnson

    I was told by a creditor that once I paid bill. Which was late, on my credit report it would state current and my late payment would be removed as well. The late payment has not been removed and I’ve spoken with a supervisor and he stated they can’t remove the late payment. I was lied to and I would like to know what steps can I take to seek justice.

    • Thomas Bright

      Sorry to hear about your difficulties here. I’m not sure how much recourse you will have if the payment was later than 30 days. Your best bet might be to continue calling the company, talking to various supervisors, and explaining your situation. Though it very well may be the case that they can’t remove it. For a more formal appeal, you could also write a goodwill letter (there’s a link to how to do that in this article). From there, you might contact the CFPB to make an appeal, but again the success of this will depend on the specifics and additional details of this situation.

  • Rebecca clark

    I had a catalogue a few years back, a customer ordered quite a few xmas presents from it. She paid for a bit but then hasn’t paid any at all now so im paying out of my money. She’s now homeless and im stuck with the debt. Any ideas what i can do?

    • Thomas Bright

      Hi Rebecca,
      Sorry to hear about this. Admittedly, I don’t know a lot about catalogues, but my first thought is to contact the catalogue company to see what they can do. It may be that they have their own debt collections protocol for these situations. Do you have original contracts and agreements from when you started working with them? I’d start there, but depending on the amount of debt, it might also be worth consulting a legal opinion here. Best of luck!

  • Tomm Kurts

    I paid my mortgage on July 30th and the mortgage company reported it as late to the big 3 bureaus.

    This is the first time this has happened. I’ve had 2 other mortgage companies in the past that never did this. Is this inaccurate reporting?

    Tomm

    • Thomas Bright

      Tomm,

      I wish I could help more, but I wouldn’t be able to tell if this is accurate or not. Start by contacting the mortgage servicer, and then proceed with disputing the error if it is one. Best of luck!

  • I finished a debt relief program,how long does it take for the charge offs to come off my reports.Is there anything I can do to speed up the process and taking the negative marks off?

    • Thomas Bright

      They can stay for a total of seven years. Keep in mind that those accounts can also still be sold to collection agencies.

  • Hi there I struggled to pay a few or my retail accounts but paid all my debt last year September it was handed over to the collection agencies I saw two accounts on my credit report with negative balances is there a way that can be removed and if yes how do I do it

    • Thomas Bright

      Hi Jesme,

      You could go through the dispute process as laid out in the article, but it depends on what exactly you are disputing. If you don;t believe the account ever should have gone to collections, you can call the original creditor to figure out what happened. One good thing, though, is that new credit scoring models are rewarding paid off collections account. So, if you can’t remove it but did pay it off, the damage should be much more limited than it would have been a few years ago.

  • Cassandra

    What does “Based on your dispute request, TransUnion has included new information on your TransUnion credit report.” Mean?

    • Thomas Bright

      It sounds like you submitted a dispute, which caused them to alter or add information to your credit report. Since this is TransUnion specifically, I recommend that you visit http://www.annualcreditreport.com and get your free TransUnion report, if you haven’t done so already.

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