Here’s a question I got last week from someone who’s obviously read my advice about improving a credit history and score…
I took your advice on trying to raise my credit score and clean up my credit. I contacted the company and explained my situation and asked them if they would be willing to remove the negative account from my credit report, or if they would be willing to move it from negative to positive status. I have been faithfully paying off this debt, but it is still negatively impacting my credit. I have not heard from them and was wondering how long I should wait – and if they don’t respond within so many days, then what is the next step that I need to take. Or am I just at their mercy?
Eventually, negative information in your history will go away by itself, but not for a long time – 7 years, unless it’s a bankruptcy, in which case it’s there for 10. Information about criminal convictions has no time limit. And neither does information reported because you applied for a job with a salary over $75,000, or because you applied for credit or life insurance of over $150,000. Seven years is a long time to lug around bad stuff on your credit report. But here’s the good news. You don’t have to wait years for negative stuff to die a natural death. You can actually get rid of negative things on your credit report anytime, at least theoretically. How? Well, remember the way the system works. The CRAs are nothing more than giant computer banks, receiving information monthly from your creditors, storing it, and spitting it back out to those requesting your report. The CRAs don’t create any information themselves. So if we’re going to get rid of bad stuff, let’s go to the people who put it there in the first place: the creditors. There’s no law that says creditors have to report delinquencies or other negatives. In fact, they don’t have to report anything. The only delinquency that’s required to be included in your credit history is child support. Nothing else has to be reported, and anything that has been reported can be removed at the whim of whoever reported it in the first place. And that’s the secret to fixing your credit history. As you go through this process, you may have creditors tell you that the law requires negative items be reported on your credit history. Bull. They put it there, they can take it off, and there’s no law against it. A friend of mine had a slew of negative stuff in her credit history, all the result of a time in her life when she was a lot less responsible than she is today. She’s been patiently working for a number of years, off and on, to restore her credit history to pristine condition. How? She simply writes a letter to each creditor that reported a negative item and asks them to remove it. This is a particularly effective technique in either of two situations: when you’re still a customer of the creditor or when you have an unpaid balance that you can negotiate with. Following is a letter she wrote to a credit card company that she still deals with:
May 24, 2011
123 Maple Street
Anytown, USA 12345
PO Box 12345
Wilmington, DE 12345
Regarding: MasterCard account #1234-4567-8910
As you know, I have been a loyal customer of your company for more than seven years. Over that time period, I have received many offers from other companies for credit cards with lower interest rates or other terms that could have been more attractive, yet I’ve remained with your company.
I recently obtained a copy of my Equifax credit report and was dismayed to learn that your company has reported that I made two late payments four years ago. I’m writing today to ask you to have this negative information removed from my credit history. Having become conversant with the Fair Credit Reporting Act, I’ve learned that this is easily accomplished.
As you are well aware, my record of paying on time is unblemished with those two exceptions. Since even one negative item in my credit history is one too many, please repay my loyalty and responsibility by helping me have these items removed.
Thank you in advance for your timely response. I look forward to continuing our mutually beneficial relationship for many years to come.
Believe it or not, this simple letter, or a variation thereof, has worked for her in five instances where she’s used it. So the odds of eliminating negative items placed by current creditors are pretty good. But don’t think that a simple letter like this will always do the trick. Sometimes she got a response back like, “I’m sorry, but we are unable to act on your request because company policy precludes alteration of accurate negative information.” That’s not a defeat. It’s a challenge. If you get a response like that, do what she did: Take the fight to a higher level. For example, write again, only this time to the president of the company. Maybe you can say something like…
I am enclosing copies of two letters: one that I wrote asking your company for help with my credit history, and their bureaucratic response. They state in their reply that your company policy prohibits their helping me. My assumption is that your company policy also includes making a profit. I’ve paid you more than $2,000 in interest during the seven years I’ve been your loyal customer. Am I to understand that you no longer value my business enough to write one simple letter to Equifax?
Blah, blah, blah; you get the picture. Be a squeaky wheel for as long as it takes to get results. Remember, this is a game of patience and perseverance. If you have an unpaid balance, you might also use that to negotiate. You can offer to settle the debt completely by paying part of what’s owed, along with getting any and all negatives removed from your credit history. Crucial, however: Get a written agreement that it’s going to occur before you pay. Some creditors will happily tell you anything to get your money, then refuse to follow through on their promises. Make notes of any phone calls, including dates, times, and names. And always, always get everything in writing.
The two examples above rely on using your existing leverage – being a current customer or owing money – to negotiate from a position of strength. How can you get negative items removed when you’re not a customer and don’t have an unpaid balance? Well, you can and should still write the creditors. Simply build a case that you shouldn’t have to suffer for years simply because you made a few mistakes, especially since you’re now a new, responsible citizen. If you had problems that caused the delinquencies way back when (medical bills, lost job, etc.), don’t be shy about playing a little verbal violin music.
Stacy Johnson is a personal finance author, speaker, and television news personality. His Money Talks News series has aired for more than 20 years on dozens of network affiliates nationwide.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.