If you are trying to buy a home, obtain a car loan, rent an apartment, or even apply for a job, the information contained in your credit report will be a big factor in determining your success or failure. While in most cases your credit report will be accurate, many people find negative items on their reports that they didn't even know existed. While there are plenty of companies that offer to help remove these items, they don't do anything you can't do yourself. To clean up your credit report and get rid of those negative items, here are some top strategies you can start using immediately.
Send a "Pay for Delete" Letter
If you have a negative item on your credit report that is accurate, you do not have the right to dispute it. However, one way to get this item off your credit report is to send your creditor a "pay for delete" letter. In this letter, you will ask that your creditor remove the negative information from your credit report in exchange for you making full payment on the amount owed. Since creditors are eager to get money owed to them, this strategy will work in many cases.
Use the Statute of Limitations
One thing many people fail to realize about negative items on their credit reports is that the information does not remain on the report indefinitely. If you have seven years that you can afford to wait around, this statute of limitations will mean the negative item will completely disappear from your credit report after seven years, and in some cases sooner. Also keep in mind that with each passing year, the negative items will have less and less impact on your overall credit score. Yet before you decide to use this strategy, you may want to seek advice from a CPA who may be able to suggest other strategies that may be more effective.
Submit a Credit Challenge
Unlike the "pay for delete" letter that has a negative item dropped from your credit report in exchange for full payment of your debt, the credit challenge is sent to the credit bureau itself. In this formal submission, you will be asking the credit bureau to investigate what you believe is an inaccurate negative item on your credit report. If you think the credit bureau will just ignore your challenge, this can't happen, since the credit bureau is required by law to investigate these matters. If you use this strategy, include a detailed description of the negative item in question, why you are disputing it, and copies of any documents that will help bolster your case.
Don’t Worry About Soft Credit Hits
When an insurance company, landlord, or an employer who is conducting a background check does a soft credit check on you, this won’t impact your credit score. In most instances, soft credit hits will only remain on your credit report for no more than 24 months, and in many situations no more than 12 months. A soft credit hit will never prevent you from building and maintaining good credit, so despite what some creditors may tell you, a soft credit hit is nothing to worry about.
Get a Free Copy of Your Credit Report
Always take advantage of being able to obtain a free copy of your credit reports each year from the major credit bureaus. Since a negative item may appear on one report but not another, you will need to obtain a credit report from the three major credit bureaus. Once you have the reports in hand, carefully examine all sections of each report. Should you find negative items you believe are inaccurate, contact the credit bureau at once. If you believe the problem to be extensive and potentially damaging from a legal standpoint, meet with your CPA to discuss your options.
Submit a Challenge to Your Lender
If you choose to submit a credit challenge letter to a credit bureau in an attempt to have a negative item removed from your credit report, be willing to send a similar challenge to your lender. Just like the credit bureaus, your lender will then be required by law to investigate the matter. By submitting this letter and documentation that adds credibility to your argument, you may find your problem gets resolved much faster than you anticipated.
Ask for a Goodwill Deletion
When you send this letter to a creditor, you will try to make yourself sound as good as possible while also trying to make the creditor feel guilty for giving you a hard time about a debt. This letter will have you describing why you were late with payments, how long you have been a good customer, and why your account should be looked at in a more favorable light. Though there is no guarantee this will work, since the creditor is under no obligation to comply, speaking to the right person at the right time may make all the difference in helping to clean up your credit report.
Contact a Business Directly
When a negative item appears on your credit report, you may get better results if you directly contact the business that reported the item to a credit bureau. If you do this, it's best to make your dispute in writing, even if it is a local business. By having everything in writing, you can be sure no important details are left out as to why this negative item needs to disappear from your credit report. Rather than lose a customer, many businesses will be willing to work with you to get the item removed. However, you will be responsible for contacting the credit bureaus for removal of the item.
Negative items on your credit report can impact your life in many ways, and it always pays to try to get as many of them cleared as possible. Every instance is unique, so you may have to try more than one approach to get negatives removed from your credit report. Once things start to improve, you’ll see your credit score improving, as well, which will put you in a better financial position for the future.