How to Clear Old Creditor Collections From Credit History

Old collection accounts on your credit reports may not be hurting you as much as you think. Sure, they could be a drag on your credit scores, but the passing of time really helps. Most creditors care more about how you have paid your bills over the past 12 to 24 months than about one or two accounts that you defaulted on five years ago. On the other hand, removing old collection accounts could lead to a boost in your credit scores, qualifying you for better rates on credit cards, mortgages and other loans.

Instructions

1

Get copies of your credit reports from the website Annual Credit Report (see Resources). The nationwide credit bureaus established the site to provide free reports as required by federal law. Order from the homepage or call 877-322-8228.

2

Review your credit reports from all three credit bureaus, TransUnion, Experian and Equifax, to determine if you should simply wait for the old collection accounts to expire. According to the Federal Trade Commission, negative entries such as collection accounts can be listed on your reports for seven years. Check the date of last activity on your collection accounts. That could be the date the accounts were charged off by the original creditor or listed on your reports by a debt collector. If the accounts are due to naturally expire in a few months, you're better off just waiting. Go on to the next step if that's not an option.

3

Dispute the accuracy of the collection items. The Fair Credit Reporting Act gives you the right to challenge any information on your credit reports, even if you know it to be true. The credit bureaus have about 30 days to investigate and respond, and by law the information must be removed if the credit bureau cannot confirm its accuracy. The credit bureaus depend on the original creditors and debt collectors to verify the information, but that doesn't always happen, allowing credit repair agencies and others to take advantage of a legal loophole. To dispute your collection items, write a letter to the credit bureau and mail it to the address on your credit report. You have the legal right to claim that the collection accounts are not yours. The law says the burden of proof rests with the credit bureaus. Go on to the next step for another option.

4

Make an offer to pay the collection items if the creditor or debt collector agrees to remove the negative information from your credit reports. This process is called a "pay for delete," and is completely above board, although the creditor is under no obligation to agree. Make sure you get a commitment in writing. Take the process a step further by offering to pay less than the full balance, a process called debt settlement. According to The New York Times, creditors will sometimes settle old debts for as little as 30 percent of the balance.