What Is the Point of Removing Negative Debt From a Credit Report?

Even if you never use credit or plan to, negative items can tarnish your image in front of other parties that you might care about --- maybe even an employer. You could come to a point in your life where you want to build credit or obtain a loan for an emergency, but find that a single negative credit item stands in your way. Disputing such an item probably won't take more than a few hours, and you can do it online for free.

More Than Just for Loans

Anybody with a pertinent interest in your financial background can pull your credit report and potentially use it against you or as a reason to view you in a better light. Employers, for example, may use a credit report to help make a hiring decision. If you have a bankruptcy erroneously reported on your file, the employer could see this as a major character flaw, especially if the job requires handling money.

Will You Want Credit in the Future?

Negative items can stay on your credit report for seven years, or 10 in the case of a Chapter 7 bankruptcy. An unpaid tax lien, meanwhile, will never go away. You might not care about getting a loan now, but you could want one --- such as a mortgage or car loan --- in the future. Most homeowners purchase a home with a mortgage, because stocks and other investments tend to offer a better return than the cost of a mortgage. You might also want a credit card for emergencies.

Effort

Common errors, such as a collection account that clearly does not belong to you, take about four hours to correct, according to Bankrate.com. A few hours of your time can drastically improve your credit score enough to bump you into a higher credit score tier and lower an interest rate, potentially saving thousands on a loan. You can also avoid the hassle of a credit report dispute entirely by hiring a credit repair company or lawyer to handle the paperwork.

Tips

You should start on any credit dispute immediately, but only dispute items you believe are legitimate errors, otherwise the credit bureaus may ignore your claim as frivolous. Between the time it takes the credit bureaus to investigate a case and potential lags in updates to a credit score, it might take 90 days more to remove a negative item. You could use a rapid rescoring company to remove a legitimate negative item in a few days, but only a lender has access to this service. Also, a rapid rescoring service probably won't investigate a claim, so you would still need the original creditor to admit to a mistake.