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How To Get A Charged Off Item Removed From Your Credit Report

Beautiful girl talking on the cell phone, isolated on whiteHave you been turned down for credit? If so, you should have been told why. The Fair Credit Reporting Act (FCRA) mandates that if a lender refuses you credit, it must tell you why. And it must be very specific. It can’t be vague and write something such as, “you didn’t fit our customer profile.”

If you know why you were refused

The reason why most people are refused credit is due to their credit scores. If you were told this is why you were refused, the first thing you need to do is get a copy of your credit report from the three credit bureaus – Experian, Equifax and TransUnion. And no, it won’t include your credit score but it should tell you why you have a bad credit score, which will be due to “bad” items in your report.

The six negative items

The six negative or bad items that would drag down your credit score are:

• Late payments
• Judgments
• Collections
• Bankruptcies
• Charge offs
• Liens

Unfortunately, there is nothing you can do about a bankruptcy, a lien or a judgment. A bankruptcy will stay in your credit report for either seven or 10 years (depending on the credit reporting bureau) and a judgment or lien will remain there for seven years. These are just part of your credit history and there’s nothing you can do about them short term.
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Dealing with charge offs

If you find that your credit report does show a charge off, you may be able to get it removed. As a general rule lenders do not write off debts until they are six months past due after which time they may sell your debt to a collection agency. You need to first determine which lender reported your debt as a charge off and contact it by phone. Your credit report will include the name of the lender but you may have to do some digging to get a phone number. Once you do, you can begin negotiating with the company to settle the debt and have it removed from your credit report.

You will have to pay something

You will need to offer to pay some percentage of your debt. You might start at, say, 30% and see what kind of response you get. Most lenders will negotiate because they’d rather get “half a loaf” then sell your debt to a collection agency where it would get just pennies on the dollar. You do have to make it clear that you’re willing to pay part of your debt but that in return, you expect the lender to remove the item from your credit report(s).

Get it in writingWoman holding glasses and reviewing credit card statement

If you are able to settle your debt, make sure you get in writing the lender’s promise to have the item removed from your credit reports. Don’t rely on verbal promises. Get a letter or email detailing how much you have agreed to pay and the item will be deleted from your credit file.

Review your credit report for mistakes

Another important reason to get your credit report is that it could contain mistakes that are dragging down your credit score. When you review your reports look for charge offs, judgments, liens, accounts that have gone to collection, etc. If you find some, make sure they’re really yours. The credit bureaus process thousands of items a week and they can make errors.

How to dispute an error

Let’s say you review your report and find a debt charged off that wasn’t yours. Maybe it was someone else’s that got in your credit file by mistake. In any case, you can dispute the item. All three credit bureaus have forms online where you can file a dispute. Warning – you can’t just say, “Hey, that debt wasn’t mine.” You need to have documentation supporting your claim. If you do have adequate documentation, the credit bureau must contact the company that reported the item and request validation – or proof that the item was not an error. In the event the company cannot validate the item or just doesn’t respond within 30 days, the credit bureau must by law remove the item from your report.

Check out this video for more details on disputing errors in your credit report.

Other things you could do to boost your credit score

If you have a debt that’s gone to collection, you most likely know about this because the collection agency has probably contacted you at least once. If so, you may be able to also negotiate with it to have the item removed from your credit file. The collection agency purchased your debt from your lender and for much less than you really owe. This leaves room for negotiation so you might be able to settle the debt for 40% or less with the stipulation that, in return, the collection agency amends your credit report to read paid in full.

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