Note that the situation for many types of debt has changed due to the impact of the coronavirus outbreak and relief efforts from the government and others. Specifically, AnnualCreditReport.com (see below) is now offering free credit reports on a weekly basis, rather than one per year, until further notice.
* * *
Late payments happen. So do missed payments. While most borrowers have the best of intentions, sometimes debt becomes overwhelming, and payments are forgotten.
Essentially, accounts with a perfect payment history help your credit, while a derogatory account (with late or missed payments) hurts your credit score and interest rates when applying for new credit.
If you have an old, delinquent or otherwise negative account in your credit history, you may be wondering how to remove derogatory items from your credit report. While it’s not always easy, it is possible to have negative information removed if you take the right steps.
Here’s how to remove derogatory marks from your credit report before it’s due to fall off naturally (typically at the seven-year mark), and how the process works.
- Look for negative information in your credit history
- Dispute incorrect negative information
- Remove legitimate derogatory items from credit reports
- Be patient
You may not even know if you have a derogatory account in your credit history. So you should start by getting your free credit report.
You can get your credit report from many different services. But by law, each of the three major reporting bureaus has to give you a free credit report each year. And during the coronavirus pandemic, consumers are entitled to free weekly reports through April 2021, via AnnualCreditReport.com, the official U.S. government website.
When you open your credit report, you can find a list of all derogatory accounts. These include any account with a late or missed payment.
Below is a sample screenshot showing a credit card account that has a 30-day late payment from July 2011. You can see that it’s a derogatory item from the color — some reports show yellow and red boxes — and we know that it is a 30-day late payment because the box says “30” in it.
Look through your credit report and make a list of all negative information. Then compare to your records to make sure everything there is accurate.
If it’s not accurate, getting it removed is imperative. And if it is accurate, it’s harder to remove, but still possible.
If you find a derogatory account that is incorrect, you can file a dispute with the credit bureau to have it removed.
|A real-life example of how to remove derogatory items from credit report|
“In 2009, I found such an item on my credit report and filed an online dispute with TransUnion. That was the credit bureau that furnished the report with incorrect information.
“I filled out a short online form explaining the error and a few days later got a response that they had contacted the institution, verified the information, and it was removed. Talk about a piece of cake.”
— Eric Rosenberg
You can file a dispute from a link provided in your credit report from AnnualCreditReport.com, or through any of the links below.
Keep in mind, you may need to create an account with the credit bureau to complete the process. But you don’t need to sign up for any subscription or other paid service with these companies in order to remove a derogatory mark.
You can also file disputes by mail. However, the online dispute process is much easier for anyone comfortable using a web browser.
The reporting bureaus are required by law to handle disputes in a timely manner, typically 30 days or less, according to the Federal Trade Commission. Removing inaccurate negative information from your credit report is one of the fastest ways to quickly improve your credit score.
So what happens if the negative information on your account is legitimate? Removing that information is much harder, but not impossible.
Negative information typically lives on your credit report for seven years for old credit accounts. Bankruptcies last even longer, with a 10-year period before they fall off your credit report.
|How long do derogatory marks stay on your credit report?|
|Missed payment||7 years|
|Account charge-off||7 years|
|Student loan delinquency or default||7 years|
|Debt settlement||7 years|
|Bankruptcy||7 years (for Chapter 13) or 10 years (Chapter 7)|
|Tax lien||7 years (or longer if it’s unpaid)|
|Civil judgment||7 years|
You can always wait seven years until the information goes away, but you can try to get it removed sooner. The method to have negative information removed from old accounts is simple: call and ask.
If you call and ask a creditor to remove a late payment or other negative information from your history, remember that they are under no obligation to do so. Essentially, they’re doing you a favor if they proceed.
Ask very nicely, and consider using a few points below to get sympathy from the call center representative you speak with.
- Explain that you were going through a tough financial time and have since made all on-time payments.
- Tell them that you learned your lesson, changed your ways and always make payments on time now.
- Discuss how your credit mistakes from years ago are holding you back even though you are currently making on-time payments.
You can also summarize these points in what’s called a goodwill letter, which can call to the creditor’s sympathies.
They may still say no, in which case your best bet is to ask for a supervisor and repeat what you told the first person. Some success stories say that supervisors are much more likely to approve this type of request than the first person who answers the phone.
|Can you pay to remove derogatory marks on your credit report?|
The so-called “pay for delete” strategy requires you to offer to pay off the old account in exchange for the negative credit information being removed.
If your goodwill letter doesn’t do the trick and you have the financial wherewithal to do it, pay for delete could be worth a shot. It might convince your unhappy creditor to remove the derogatory mark from its reporting to the credit bureaus.
Therein lies the issue with the pay for delete strategy, however: It’s the credit bureaus that generate your report, and they won’t be along for the ride.
There are times when a company simply won’t make the change. That means you’re ultimately stuck waiting it out.
Fortunately for older accounts, a lot of time has already passed and seven years may not be all that far away. After seven years, the late payment history will be removed automatically.
Remember, always make on-time payments going forward to avoid situations like this from recurring. Understand how your credit score is calculated and use credit to enhance your life in the future once the negative information stops holding you back.
You’re solely responsible for your credit history. So make sure you take ownership and commit to handling your borrowing and credit accounts perfectly in the future. Eventually, you’ll have good credit and access to your best student loan refinancing offers, mortgages and interest rates available.
Andrew Pentis contributed to this report.
Want to improve your credit score?These credit-building tools can help
|Secured credit card|
|Build credit with your rent|