How to Erase Unpaid Accounts From My Credit

A good credit score means getting the best interest rates on home loans and auto loans. Negative collection and charge off accounts that appear in a credit report can damage scores for years. Those with credit scores under 600 end up paying higher interest and being denied low-interest credit cards. However, unpaid accounts may not be yours or could be from an ex-spouse. Knowing exactly what is in your credit report is key to removing inaccurate and old accounts.

Instructions

1

Order your free annual credit report online from all three credit reporting bureaus. You are entitled to a free credit report from all three bureaus each year, so taking advantage of this is the first step in cleaning up your credit report. You will normally have your reports in seven to 14 days.

2

Examine the reports thoroughly when they arrive. You are looking for inaccurate information such as old accounts that are not yours. Additionally, find all old accounts that are most likely at collection agencies. Collection accounts drag your credit score down, so these will need to be addressed (see Reference 2).

3

Collect all the accounts that are not yours, and dispute this with the credit bureaus directly---all three have online options for disputes. When you file a dispute, the company who reported you has 30 days to respond, if they do not, they must delete the account from your credit file.

4

Write the validation letters based on the samples provided online to the collection accounts in your credit file that are yours. Collection accounts are normally sold many times. When they become older than five years, many of the collection accounts are unable to validate the debt. They have 30 days to respond to you.

5

Mark the date you sent the validation letter, and if you hear nothing from the collection account in 30 days, send another letter demanding the debt be removed from your credit file completely. Based on the credit laws in place, they must remove the account. If they fail to do so, contact the reporting credit bureaus.

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How to Delete Negatives From My Credit Report

Your credit report contains information about how you have handled your debt payments in the past, such as your credit cards, mortgages, car loans and student loans. Having a good credit report is important because the credit bureaus calculate your credit score using the information in your credit report. Negative information such as late payments or defaults will lower your credit score. If the information in your credit report is correct, you cannot delete negatives from your credit report. However, if the information is errant, you can dispute any errors you find by reporting the misinformation to the credit bureau .

Instructions

1

Request a copy of your credit report. Federal law entitles you to one free report from each of the three major credit bureaus--Experian, Equifax and TransUnion--once per year, which you can request through the Free Annual Credit Report website (see resources).

2

Look up the account information of any errors that you find so that you can make sure that you dispute the exact information that is incorrect.

3

Decide whether to appeal online or through the mail. If the error is on the Experian credit report, your only option is to appeal online. Equifax and TransUnion accept appeals through the mail. Usually, you should appeal through the mail because you can submit documents supporting your claim. If you choose to appeal through the mail, skip to Step 5.

4

Appeal the credit errors online by going to the credit bureau website for disputes (see Resources). You will need your personal information, credit report number and the credit report error that you are disputing.

5

Make a copy of evidence to support your dispute, such as bank statements or notices from the creditor that payment was received. The Federal Trade Commission warns that you should never send originals.

6

Mail your evidence along with a letter stating your dispute and a copy of your credit report with the error circled or highlighted to the credit bureau that is reporting the errant information. The mailing address for disputes for Equifax is, P.O. Box 740256, Atlanta, GA, 30374-0241 and the mailing address for TransUnion is 2 Baldwin Place, P.O. Box 2000, Chester, PA 19022. The Federal Trade Commission recommends sending the letter via certified mail so that you can document that it was received by the credit bureau.

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How Much Will a Credit Score Increase With Paid Collections?

Paying collections is one of the toughest choices to make for a person's credit history, because it may not improve a credit score but likely improves the creditworthiness of the borrower. More important than the impact on a credit score is how future lenders look at paid collections. Also, avoid settling, because this just puts a further drain on a credit history.

Identification

A fully paid collections account has a minimal impact on a credit score, because the important thing is that the borrower broke the terms of the agreement in the first place, according to Experian. Paying a collections only helps in the outstanding debt category of the FICO score formula. Collection accounts are the second closest thing to a bankruptcy, so eliminating some debt from a credit profile is not effective in raising a score much, because the FICO formulas responds more to negative items.

Warning

When a borrower agrees to anything with a collection agency, he should always get the terms in writing. Even if the borrower pays in full, he should get a statement that the agency will report the item as "paid as agreed." Settling for less than the balance damages a credit score, because it shows up as a debt settlement, which can cause up to 125 points in damage, according to Bankrate.com. Sometimes, if the borrower agrees to pay in full, he can negotiate for a deletion of the account.

Considerations

Future lenders will probably give extra consideration to an applicant with a low score if he pays off a collection account, because it shows integrity and desire to pay off debt. This is especially true for lenders that look at credit reports as part of the underwriting process, such as mortgage providers, and lenders the borrower deals with face-to-face. Some borrowers may feel more confident about their finances by paying an old debt.

Tip

The Fair Isaac Corp. released a reworked versions of its widely used FICO scoring system in 2008. FICO 8 ignores collection accounts with an original balance under $100, according to Ellen Cannon of Bankrate.com. In this case, paying a collection under $100 only helps loan approval chances if the lender requires it or wants to see even the smallest debt repaid.

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After Seven Years of Filing Chapter 13, How Much Will My Credit Score Go Up?

After seven years of painful waiting, a Chapter 13 bankruptcy finally leaves your credit report, but this could actually drop your score. Some people experience this anomaly because of quirks in the FICO scoring system, but fortunately even if this does happen to you, your score eventually bounces back. Most people see a boost from a Chapter 13 leaving their credit profile.

Potential Drop

The FICO scoring algorithm is really several formulas that rate the likelihood of a certain demographic defaulting on a loan, such as new borrowers. You might have a good score with a bankruptcy on your record because the FICO model compares your borrowing habits to other people with a bankruptcy. Once this item falls off your report, the FICO model puts you in a category of people without bankruptcies, so your payment habits may not appear as strong.

Considerations

Eventually, your score goes up when a bankruptcy is off your report and you manage credit responsibly. At the height of its impact, a bankruptcy might bring down your score by 240 points, according to CNN. If you have no other reportable negative items, like missed payments, you score could go up even more than this.

Timing

The clock starts ticking as soon as you file a bankruptcy motion with the court, not when you finish the Chapter 13 payment plan. Also, some of the accounts included in the bankruptcy may have already left your report, because the credit bureaus use the date of the original delinquency and including an account in a Chapter 13 case does not extend the period the agencies can report it.

Tip

Review your credit report after the bankruptcy leaves your report. All accounts included in the Chapter 13 filing must carry the notation "Included in Chapter 13 Wage Earner Plan" and the creditor cannot continue reporting the account as delinquent once you satisfy the Chapter 13 repayment plan.

You should build credit while the bankruptcy remains on your report -- you can probably enter the 700s again by building good history on new accounts. Try a secured card, which usually has a credit limit equal to your deposit and financing from auto lenders, because they often lower credit standard to meet sales requirements, suggests Aleksandra Todorova of SmartMoney.

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Can I Get an IRS Debt off of My Credit Report if It Is Older Than Ten Years?

Like all debt, IRS bills eventually become noncollectable, but not paying your tax debt could haunt you for the rest of your life and cost much more than what you owe the federal government. Most bad items eventually leave your credit report, but you can probably never wait out federal tax debt.

Identification

The Internal Revenue Service does not report delinquent tax debts to the credit bureaus, because it is an unnecessary step. It has a more powerful weapon: tax liens and levies. When you do not pay taxes, the IRS puts a public claim on any of your property and the credit bureaus find out about it. The credit bureaus can report the lien indefinitely and TransUnion and Equifax do, but Experian only reports tax liens for 15 years. Some states further restrict reporting tax liens, such as California, which limits the time to 10 years. Unless you live California, you cannot remove an IRS tax lien after 10 years.

Considerations

Once you pay your tax debt, the IRS issues a Release of the Notice of Federal Tax Lien and the bureaus report the lien for seven years. If 10 years pass, you should dispute the lien with the credit agencies---ideally sooner because of the seven-year rule. The bureaus could remove an unpaid tax lien after 10 years if the IRS does not respond to a dispute. This might happen should the IRS deem the account noncollectable and not waste taxpayer resources responding to a credit agency.

Exception

A removal of a federal tax lien does not totally put you in the clear. The credit bureaus can ignore time limits on reporting IRS tax liens when you apply for more than $150,000 in credit or life insurance and a job paying more than $75,000 per year, according to the Federal Trade Commission.

Tip

Future lenders will probably pull your report from all three agencies, so creditors usually find out about an unpaid tax lien. Tax liens put a huge drag on scores. Thus, you should pay them off immediately and wait the seven years. The tax lien should have a minimal effect sooner than seven years, because negative items become less important over time. You can try to bargain with the IRS for a settled bill, called an Offer in Compromise. These, however, rarely work, because IRS debts are secured by the lien and thus usually not included in a bankruptcy discharge.

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How to Document an Identity Theft Crime Scene

You tried to protect yourself, but the worst has happened: Someone has stolen your identity, using your Social Security number or credit-card information to make fraudulent charges and stick you with the bill and an injured credit report. It's important to get your facts straight from the start, so try to keep a level head. Jumbled, conflicting information could lead your creditors to doubt your innocence. You need to know how to properly document an identity theft crime scene, which will ensure that you have done everything in your power to correctly report fraudulent charges and accounts.

Instructions

1

If someone has been using your Social Security number, report it by calling the Social Security Administration inspector general's fraud hotline at (800) 269-0271. Also mail a formal written complaint to: Social Security Administration, P.O. Box 17768, Baltimore, MD 21235. Find more information at www.socialsecurity.gov/oig.

2

If someone has been opening new credit card accounts in your name or using your existing accounts fraudulently, notify the three major credit-reporting agencies, TransUnion, Equifax and Experian. Request a copy of your credit report from each agency. Because you suspect fraud, it should be free.

TransUnion: P.O. Box 1000, Chester, PA 19022
(800) 888-4213; www.transunion.com

Equifax: P.O. Box 740241, Atlanta, GA 30374-0241
(800) 685-1111; www.equifax.com

Experian: P.O. Box 2002, Allen, TX 75013
(888) 397-3742; www.experian.com

3

Once you have received your credit reports, find the accounts that are being used fraudulently, close the accounts immediately, and dispute the charges with the creditors.

4

If a new account was opened in your name, fill out a federal ID Theft Affidavit (available at www.consumer.gov/idtheft/pdf/affidvit.pdf). Send copies by certified mail to the companies involved. If an existing account has fraudulent charges on it, send the affidavit and documents to support it -- such as your police report or any collection agency notifications -- to the companies involved by certified mail.

5

Send a letter by certified mail disputing the fraudulent charges or accounts to the credit agency that is reporting them. (For example, if Experian is reporting a fraudulent MasterCard account, send a letter by certified mail to Experian disputing the account.) Request an initial fraud alert that will last for 90 days; after the 90 days, you may file for an extension, which will stay on record for seven years.

6

File a Miscellaneous Incidents Report with your local police. Keep a copy of the police report for your records.

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How to Protect Credit Rating From a Separated Husband in Pennsylvania

When you've separated from your husband, one of the last things you may be thinking of is your credit rating or score. Yet, it's important that you take steps to secure your property and credit so that if you end up getting a divorce, you don't emerge from it in a rough financial spot. You should come to an agreement with your spouse before the separation in order to make sure your credit is protected and that he will not be able to run up credit card debt in your name.

Instructions

1

Hire a lawyer and a mediator to help you draft a separation agreement and determine how property will be split. In Pennsylvania, there is no "legal separation," but you should still come up with an agreement as to how you will divide any debts, property or custody, especially if you intend for the separation to end in divorce.

2

Sign up for your own credit card and bank account.

3

Split any credit card debt you and your husband share in a manner that is fair to both parties. Transfer your portion of the debt to your new credit card and have your husband transfer his to his own card. Close any joint credit card accounts and let your creditors know you are separated.

4

Remove your husband as a card holder from any credit card accounts you may have in your own name. Ask him to return the credit card to you and cut it up. If you keep him as a card holder, you will be held solely responsible for any debt he incurs.

5

Make sure all your bills get paid each month, especially ones in your name. Not paying utility or telephone bills can ding your credit score. Assume responsibility for all the bills in your name and close any accounts you do not personally need.

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