No matter what negative items are on your credit report:
bankruptcy, charge-offs, late payments, judgments, or any other
derogatory information, under the Fair Credit Reporting Act (FCRA),
you have the legal right to challenge and remove items that are
inaccurate, erroneous, misleading or outdated. A qualified
lawyer can advise you of your legal rights and provide
information on legal ways you can have negative items removed from
your credit report.
Your credit report is how creditors and lenders determine their
financial risk in granting you a loan or line of credit. These
reports are provided by credit reporting agencies (CRAs), also known
as credit bureaus, and sometimes they contain inaccurate,
incomplete, outdated and sometimes even misleading information that
could cause you many problems including:
- Being denied a loan or line of credit;
- Having to pay a much higher interest rate on any credit or
loan amount for which you are approved than someone who has good
credit would have to pay;
- Having to settle for much smaller lines of credit and
greatly increased difficulty in getting an increased line of
credit than someone with good credit;
- Insurance coverage denial or loss; and
- Loss of employment opportunities as employers are also
requesting credit reports for prospective employees.
What are derogatory or negative credit items?
A derogatory or negative credit item is a bad mark on your credit.
For example, if a creditor says you are 30 days late on a payment,
it’s considered a derogatory or negative credit item. Other examples
of derogatory or negative credit items include: other late payment
information in increments like: 30, 60, 90, 120, 180 days late; loan
default; collections; charge-offs; judgments and foreclosures.
Judgments are also considered public information. Bankruptcy is also
considered a derogatory or negative credit item.
What is a charge-off?
If you become seriously delinquent on an account, which most people
who have filed bankruptcy have, the creditor may decide that you
probably won’t pay the debt. If this happens, the creditor writes
the debt off as a loss for tax purposes—the charge-off. However,
even though the creditor writes off the debt, they still will
continue to attempt to collect on the debt until they are notified
that you have filed for bankruptcy. Charge-offs, like other
derogatory items are bad news for your credit report and your credit
score. If the debt has been discharged through your bankruptcy, the
charge-off should no longer appear on that account because it is
included in your bankruptcy.
Do negative items have to remain on my credit report for
No, they do not. This is a myth that creditors and collections
agencies want consumers to believe. While the law mandates that a
negative item must remain on your credit report for no more than 7
years, the creditor can remove it sooner if they see fit to do so.
Inquiries can only stay on your credit report for up to 2 years.
However, if an account has been discharged through your bankruptcy,
all negative items must be removed and the account should instead
indicate that it was included in your bankruptcy.
To start the process of repairing your credit, contact each of
the three major credit bureaus (listed below) for a copy of your
credit report. You probably will have to pay around $9 for each
report. However, if you've recently been turned down for credit, you
can get a report from the reporting agency for free. It is important
for you to get a report from EACH agency because your credit report
could differ by quite a bit and information from each agency is
requested and used by lenders, creditors and other companies
requesting financial information about you. Once you receive your
credit report from each credit bureau, you have the legal right to
dispute any items that are outdated, erroneous, inaccurate or
If you decide to dispute the item yourself, write a letter to
each credit bureau and explain how you feel the account is
inaccurate, outdated, erroneous or misleading. Be sure to send
documentation that supports your claim. It’s also a good idea to
include a copy of the credit report with the disputed item circled
or otherwise marked. Your letter needs to include:
- Your full name
- Your complete mailing address
- Your date of birth
- Your Social Security number
- The name of the creditor and account number of the disputed
- The reason for your disagreement with the disputed item (be
- What action you would like the credit bureau to take (e.g.,
remove derogatory information, update the account balance to
properly reflect a $0 balance, indicate the account is included
in bankruptcy, etc.), and
- Your signature.
The following are the addresses to each of the major credit
P.O. Box 740241
Atlanta, GA 30374-0241
PO Box 9595
Allen, TX 75013
2 Baldwin Place
P.O. Box 2000
Chester, PA 19022
To assure that the credit bureaus get your letter, you should
send your letter by certified mail with a return receipt requested.
Or, if you want to expedite the matter, send it by Express Mail (2 -
3 business day delivery service) or by overnight mail via the U.S.
Postal Service Express Mail service (FedEx and other carriers don’t
deliver to P.O. Boxes, but the U.S. Postal Service Express Mail
overnight service will). When sending it overnight don’t check the
box to waive the signature. This way, you’ll have record of their
receipt of your letter.
The credit bureau has 30 days to investigate each disputed item
and either verify it or delete it. The law requires that each
disputed item must be verified and accurate for it to stay on your
credit report. If an item is found to be partially inaccurate, the
credit bureau must update the information so that it is completely
accurate. At the end of the credit bureau’s investigation, you will
receive a copy of the results and an updated credit report.
If you are not satisfied with the credit bureau’s findings, you
may be able to dispute it again, especially if you have additional
information for the credit bureau to investigate. There have been
cases where the credit bureau verified the debt to belong to the
consumer and later had to delete it because the consumer was able to
prove that the debt was indeed inaccurate or didn’t belong to them.
It takes a lot of hard work sometimes, and you may have to dispute
an inaccurate item more than once.
There are times that the credit bureaus don’t investigate
thoroughly and simply take the word of the person answering the
phone that a debt belongs to you or is otherwise accurate and
verifiable. If you find that you continue to be unsuccessful by
going through the credit bureaus, you may want to consider
contacting the creditor directly. Many consumers have been
successful in having negative items deleted by contacting the
creditor directly because creditors don’t want inaccurate
information being reported any more than you do. You’ll find each
creditor’s contact information at the end of your credit report.
There are a lot of unscrupulous companies and individuals who
make outlandish promises and when it’s time to put their money where
their mouth is, no results are yielded. Some of these companies may
try to entice you to change your Social Security number or get an
Employer Identification number (EIN) to create a new credit report.
Don’t do it. It could cost you early because you could be charged
and prosecuted for mail or wire fraud if you use the mail or
telephone to apply for credit and provide false information. It’s a
federal crime to make false statements on a loan or credit
application, to misrepresent your Social Security Number, and to
obtain an Employer Identification Number from the Internal Revenue
Service under false pretenses.
The Federal Trade Commission (FTC) provides a brochure about
credit repair scams in Adobe Acrobat Portable Document Format (PDF).
Click here to download it.
Contact an experienced and reputable
lawyer for more information on your rights under the Fair Credit
Reporting Act (FCRA) and the Consumer Credit File Rights Under State
and Federal Law. If you need to file for bankruptcy, contact