How to Clear a Bad Debt Collection on Credit

A bad debt reflected on your credit report can be removed, if it's erroneous. As noted by the Federal Reserve Board (FRB), just like your postal mail contains numerous mistakes in the spelling of your name or address, your credit report can contain likely error as well. Bad debts can show up on your credit reports due to many reasons, including out-of-date information, identity fraud, and simple error. If you want to clear a bad debt collection from your credit record, it must be in error and not a legitimate debt on which you defaulted.

Instructions

Erroneous Bad Debts on Your Credit Report

1

Acquire a copy of your credit report from the three major credit bureaus: Equifax, TransUnion, and Experian. The FRB notes that you're entitled to one free credit report every 12 years from each of these agencies. Your files can be requested over the Internet (www.annualcreditreport.com) or by telephoning or mailing a request to these companies.

2

Contact the credit bureau as soon as possible after finding a bad debt that's listed on your report in error. Credit bureaus will permit you to file a dispute online, but it's best to write the bureau directly to make sure that all of your communication is documented. Your letter should contain the following information: your name, address, and social security number; the item in your credit report that you are disputing; and the reason you are disputing the alleged bad debt. If you have supporting documents, include copies of those as well. Finally, ask the credit bureau to either correct or delete the item in error, as applicable.

3

Send your correspondence to the credit bureau(s) by certified mail, return receipt requested. Although this isn't absolutely necessary, using certified mail gives you verifiable proof that you attempted to rectify the situation.

4

Give the credit bureau(s) between 30 and 45 days to investigate the alleged bad debt. If the item in dispute is removed, the credit bureau must, at your request, send a copy of your corrected report to anyone you specify who has requested it in the last six months, or, in the case of an employer, the past two years.

5

If the credit bureau doesn't agree to clear the bad debt from your credit report, draft a statement of fewer than 100 words regarding the dispute and mail it to the credit bureau. It will be included in your file and in all future credit reports.