Bad credit is a more serious problem than most of us realize. You’re probably aware that a low FICO score can make it difficult or impossible to get a loan for a home or car. However, you may not realize that bad credit can even make it difficult to get a job. Bad credit can also mean that you pay higher insurance premiums.
Employers and insurance companies look at credit reports to determine their level of risk in hiring someone or taking them on as a client.
Bad credit is more than just an inconvenience. It could cost you tens of thousands of dollars over the years, in the form of missed opportunities, increased insurance premiums, and higher interest rates.
The Fair Credit Reporting Act
The Fair Credit Reporting Act dictates what type of information can be on your credit report and how long it can be on there. This law also allows you to enforce your right to have accurate credit information reported, as well as have any errors from your credit report removed. When it comes to repairing your credit, this law can become your best friend.
Removing Invalid Information From Your Credit Report
Follow these steps to get inaccurate information taken off of your credit report:
- First, order a copy of your credit report. You can contact the three main credit bureaus, Experian, Trans Union, and Equifax to obtain a free copy once a year.
- Look for errors on your credit reports. Sometimes companies make errors and you may have blemishes on your credit report that never happened.
- It’s also possible that you’ve been a victim of identity theft. Many victims don’t even realize this until they look at their credit report or get a call from a collection agency trying to get them to pay for an account they didn’t open.
- Contact the credit agencies. You can send a letter to the credit agencies by mail or e-mail to dispute any errors you may find.
- The burden of proof is on the credit agencies and it’s up to them to investigate and verify the entries on your credit report. If there’s an error or if they’re unable to verify the accuracy of the entry, they’re required to remove that entry.
- It’s even possible to dispute errors on your credit report by directly contacting the companies reporting those errors. When you dispute the item in writing, the business in question has to conduct an investigation. If the item is found to be an error, they notify the credit bureaus and the error is removed.
Removing Valid, Negative Entries from Your Credit Report
Unfortunately, there may be items that are negatively affecting your credit score that are accurate. If you have overdrawn accounts, late payments, or accounts in collections, there are still some things you can try to do to get those items removed.
- Make a “Pay for Delete Offer” to get delinquent accounts removed from your credit report. With a Pay for Delete Offer, you’re negotiating with a creditor that is reporting negative items to the credit reporting agencies.
- You’re offering to pay the account in full, and in exchange your creditor agrees to remove the negative item from your credit report.
- This isn’t a foolproof technique. Some creditors will accept this deal and some won’t.
- Make a goodwill request for deletion. This strategy is used if you’ve already paid off the account in question. You’re basically asking the creditor if they’ll stop reporting the negative details of the account since the account has been paid.
It’s very important to check your credit score at least once per year because mistakes can and do happen. You’ll want to get those errors off of your credit report as quickly as possible.
If the negative items on your credit report are accurate, it’s more difficult to get them removed. However, it’s worth trying to negotiate with your creditors. Otherwise, your only other option is to wait seven years for those negative items to expire.