Virtually everyone messes up their credit at some point in time – usually when they’re young and naïve. We know because we certainly made our share of bad decisions when we were young and inexperienced. The good news is that even if you really messed up your financial life, most of those mistakes will eventually be expunged from your credit report. For example, if you have unpaid or delinquent accounts, they will fall out of your credit report after seven years. On the other hand, a chapter 7 bankruptcy will stay there for 10 years.
If you’ve made mistakes with your credit, you should know that the credit bureaus usually remove bad information somewhat early. This is to prevent mistakes. In the case of delinquencies, most of the credit bureaus will automatically delete the information after six years nine months or sometime around that. The problem is that negative debts don’t always vanish on schedule. There can be misunderstandings or mistakes that allow debts to stay on your credit report much longer than they should. And they can be damaging your credit score significantly.
The ghost of debts past
You’ve undoubtedly seen Dickens’s “A Christmas Carol,” either as a movie or TV show. In either event, you probably remember that one of the ghosts that haunted Scrooge was the ghost of Christmas past. If the ghost of debt past is haunting your credit report, there are things you could do to get them off of it and here are the steps to take.
Step #1: Determine how old are the debts
If there are debts on your credit report that should have fallen off, it may be because the credit bureaus didn’t receive the correct data. So the first step is to determine how old the debt really is. In the case of a judgment or bankruptcy, this is very easy. You just count seven years from the day it was filed. But it’s more difficult to determine the age of a delinquency. Regulatory language in this area is very complicated. But what should count is the date you first became delinquent and then never caught up on the debt. As an example of this, suppose you missed a payment in January then made it up and also paid in February. If you then missed March and your bill eventually went into default your delinquency date would be March. Unfortunately, determining the date of a delinquency can be challenging. Some creditors may let your string of non-payments go on for several months before they tag your account as delinquent, while others will do it almost immediately.
Step #2: Understand there is no separate clock for sold-off debts
Your debt actually has a birth day. It’s when the account became delinquent with the original creditor. So it doesn’t matter how often your debt is sold and resold. The seven-year clock starts when you became delinquent with the original creditor. This means that if a collection agency were to buy your 10-year-old credit card debt and starts putting it on your credit report with a different date, that’s a big no-no.
Step #3: Get all three of your credit reports
You may not be aware of this but you have three different credit reports, one each from the three credit reporting bureaus. They are Experian, Equifax and TransUnion. You are allowed by federal law to get a free copy of each of your reports once every 12 months. You can either download them from the credit-reporting bureaus or get all three simultaneously at www.annualcreditreport.com. This will allow you to see which bureaus are listing the old debt. You should then contact them. This is relatively simple because your credit reports will include contact information and instructions as to how to dispute items you believe are erroneous.
Step #4: Write the credit bureaus
If you find debts that are too old and should not be on your credit report, you will need to write the appropriate credit bureau (s). While it is possible to dispute items with the credit bureaus on their websites, most experts believe it’s better to send a letter. When you dispute an old debt, the credit bureau will request the company that provided the information to verify it. If it is unable to do this, the debt must come off your report.
To dispute an old debt successfully, you need to make a case so powerful that your creditor will have to either show that the item is correct or admit that it’s not. Be sure to include copies of anything that backs up your claim. This could be copies of court filings that show the date of the judgment or bankruptcy or a letter from your original lender with information as to when the account became delinquent. In the event that a collection agency is reporting that one of your accounts is different and new debt, be sure to include paperwork showing that the two accounts are actually the same debt.
Send your letter as certified with return receipt requested. This is so that you could prove that you did send the letter and that it was received by the credit bureau.
You will also have to write your creditor as explained in the next step. This is because the way that the credit bureaus handle your dispute internally is not exactly what you would expect as revealed in this video.
Step #5: Write the lender
You should also write a similar letter to whichever creditor is reporting the debt. You can do this by reframing the letter you sent to the credit bureau, attaching copies of your documentation or just send a copy of the same letter with copies of the documents you have that prove your case. Again, you should send the letter and your documentation certified and with return receipt requested. When you do this, your creditor has a total of 30 days to review your claim and respond. One thing you shouldn’t do is make the letter sound angry. We understand that you might be very upset and that your letter might reflect this. But this can be damaging. Instead, keep all of your letters and your conversations to everybody calm and businesslike.
Step #6: Get special attention
In the event you find your initial letters don’t get the job done, you may have to kick up your approach. You could go online, spend a few minutes researching the company that reported the debt and get the name of its president. Send your next letter to that person at the company’s corporate headquarters. You should get a different kind of response from the president of the company than from its customer service department. Be sure to send the letter certified and keep a copy for your files. The Association of Credit and Collection Professionals has a searchable database of companies you could reference to get the president’s name and the company’s address. You might also follow up your letter after a few weeks with a phone call. In the event that some officious gatekeeper keeps you from speaking with the president, call the person after hours and leave your message directly in his or her voice mailbox.
Step #7: Contact the regulators
If the collector is from or associated with a bank, there is a federal agency that regulates it. These agencies actually take individual complaints and will contact the companies regarding them. This should not be your first choice. The regulators want to see that you’ve tried to solve the problem yourself so you need to be able to demonstrate that you contacted your creditor and got no response or resolution. Again, you should mail your complaint and keep copies of your return receipts. To shorten the process you could print out the agency’s complaint form, fill it in and send it attached to your documents.
Note: The primary regulator of a bank might be the Federal Deposit Insurance Corporaton (FDIC), the Federal Reserve Board or the Office of the Comptroller of the Currency. Credit Unions are regulated by the National Credit Union Association (NCAU). If your bank is state chartered, it is subject to supervision by that state’s regulatory agency. In the event your problem is with a debt collector, your best choice would be to contact the Federal Trade Commission.
Many states have agencies that regulate debt collection. When you complain to them, they may actually contact the agency on your behalf. In fact, it’s best to try your own state first as you are a constituent and would have a bit more leverage.
Step #8: Talk with an attorney
The final thing you could do is talk with an attorney. When you consult with one, this doesn’t always mean that you will file suit. In some cases all you need is a letter on the attorney’s stationary to get the creditor to review your records. If your collector or creditor refuses to take that old debt off your report, an attorney would then advise you about filing suit. If it comes to this, be sure to choose an attorney that specializes in consumer rights. You will be dealing with the Fair Credit Reporting Act, which is very convoluted. You really need someone who has worked with it, who understands the law and knows where the holes are. Another possible source for help is the National Association of Consumer Advocates. It is an organization of attorneys that specializes in debt and credit law.
