How to Remove Inquiries From Your Credit Report

You recently reviewed your credit report and noticed a slew of credit inquiries. Some were familiar, but there were several others that you had no recollection of. Even worse, you know that credit inquiries have the potential to lower your credit score and are worried that your score is in the trenches for this very reason.

Sounds familiar? Before you start calling up creditors and lenders demanding to have the credit inquiries removed, read this guide to learn more about the different types of credit inquiries, how they impact your credit rating, and what to do to have them removed.

What are credit inquiries?

There are two types of credit inquiries you should be aware of.

Hard (voluntary) credit inquiries

Each time you apply for credit, a hard credit inquiry is generated. This means that you have completed an application for a loan or credit card product and authorized the lender to access and analyze your credit profile in order to make a lending decision.

Soft (involuntary) credit inquiries

These are credit checks you initiate to review your credit health. Soft credit inquiries also include those that are associated with credit pulls from companies that analyze your profile to determine if you’re a good fit for their special promotions. This is most common with credit card companies that are looking to mail out a ton of pre-approval letters in hopes of landing new customers.

In some instances, your existing creditors may also use soft credit inquiries to determine if you’re eligible for a credit line increase or special financing. And others could perform routine credit checks to get a feel for your credit health, which could mean bad news for you if they decide to lower the limit or close your account altogether.

But what about loan or credit card pre-approvals that you initiate? These also count as soft credit inquiries and are sometimes offered by lenders and credit card companies to give prospective customers an idea of what they’d qualify for if they decided to do business with them.

How do credit inquiries impact your credit score?

Hard credit inquiries could decrease your credit score by up to five points, but the impact depends on several factors, notes myFICO. These include:

  • How many accounts of a specific type (i.e. revolving and installment) were recently opened in comparison to the accounts you already have
  • The volume of hard inquiries that have recently appeared on your credit report
  • The length of time that has passed since you opened any revolving or installment accounts?

However, you should refrain from applying from too much credit in a short window of time as your score could take a hit. In addition, prospective lenders and creditors could perceive you as a risky consumer that is desperate for credit, even if you aren’t.

An exception to the rule applies when you’re shopping around for the best rate on a loan product. More on that shortly.

On the other hand, soft inquiries do not impact your credit score because they are derived from requests to view your own credit or involuntary credit pulls from prospective lenders and creditors.

Rate shopping

While it’s generally a good idea to refrain from applying for too much credit at once, an exception to the rule applies when shopping around for loan products. Why so? Well, accepting the first offer for a loan that you receive could mean you’ll be spending more in interest over the life of the loan than you probably should. But by shopping around, you give yourself a better chance of securing the most competitive loan product for your financial situation with an interest rate that isn’t too outrageous.

Wondering how rate shopping works? In a nutshell, it allows you to explore loan options and even apply with multiple lenders within a certain time frame (45-day shopping period under the most recent scoring model) in order to find the most suitable loan product for your financial situation without dinging your credit score. How so? Well, multiple inquiries are grouped into one, so your credit score only gets hit once, and not the number of times you apply.

Rate shopping also helps you save a bundle of cash that would be otherwise be paid in interest if you go with the loan product that is accompanied by the lowest interest rate. It applies to the following types of loan products:

  • Mortgages
  • Auto loans
  • Personal loans
  • Student loans

Word of caution: rate shopping is quite beneficial to consumers, but it’s important to refrain from shopping until you are certain that you’re ready to make a purchase. Otherwise, you could end up with dings to your credit.

How long do credit inquiries stay on your credit report?

Credit inquiries are reflected on your credit report for two years. However, hard inquiries will only be factored into your FICO score for 12 months.

What happens if you check your own credit?

Nothing will happen when you check your own credit. And since it’s a soft inquiry, there won’t be any impact to your credit score.

How should you handle hard credit inquiries that are unauthorized?

If you retrieve a copy of your credit report and notice unauthorized hard credit inquiries, you have two options:

  • Ignore them altogether. As mentioned earlier, inquiries that are over a year old have no bearing on your credit score. Therefore, it may not be worth the effort to file a formal dispute to have it removed from your credit report.
  • Contact the creditor or lender directly to have the inquiry removed.
  • File formal disputes. You can do this by drafting up a formal letter and sending it to each of the three credit bureaus.

How to file a formal dispute to have hard inquiries removed from your credit report

  • Step 1: Circle or highlight any unauthorized inquiries that appear on your credit report.
  • Step 2: Draft up a letter to each of the credit bureaus that specifies which inquiry is unauthorized, along with a request that it be removed. Also, be sure to include your name and address so the credit bureaus will know where to send their response. Letters should be sent to the following addresses:

Equifax: P.O. Box 740256, Atlanta, GA 30374-0256

Experian: P.O. Box 9701, Allen, TX 75013

TransUnion: P.O. Box 2000, Chester, PA 19016

  • Step 3: Send the letters via certified mail with a return receipt to each of the three credit bureaus. That way, you’ll know if they arrived and when.
  • Step 4: Await a response. You should hear from the credit bureaus within 30 days via mail. Regardless of the outcome, the package will also include a copy of your credit report (with any changes that were made). But if the credit bureaus refuse to respond, the inquiry must be removed.

Quick note: If you don’t feel comfortable handling the dispute process on your own, you have the option to hire a credit repair company. But because their services are accompanied by a fee, it may be worthwhile to only hire a credit repair company if you have other credit issues that need to be addressed.

How to prevent unauthorized access to your credit report

You can prevent by placing a security freeze or credit lock on your profile. Security freezes are a great way to prevent future access to your credit profile if it’s already been exposed. But credit locks are designed to minimize the risk of unauthorized access to your credit report.

How security freezes work

Security freezes prohibit lenders and creditors from viewing your report. And in order for them to access it, you provide the creditor with a PIN or unique password. But you will always have access to your information. There is no cost to place a freeze on your credit report. You should also know that security freezes are governed under the federal law.

How credit locks work

Similar to security freezes, credit locks restrict lenders and creditors from accessing your report. However, your report can be unlocked right away via the credit bureau’s website from your computer, laptop, or mobile device. TransUnion and Equifax allow you to place a credit lock on your credit report free of charge, but Experian charges a $9.99 monthly fee after the first 30 days.

The bottom line

Before you take the necessary actions to have inquiries removed from your credit report, determine how much longer it will impact your credit score. If it’s nearing the 12-month mark, drafting up a letter to send to the credit bureaus may not be worth the effort.

But if there are several recent inquiries, working to have them removed could improve your score. And if you don’t want to do the legwork, hire a professional credit repair company to do it for you.

An Introduction to ChexSystems

If you’ve ever been denied an application for a checking or savings account due to your banking history, it’s probably the direct result of ChexSystems. But what is ChexSystems, how does it work, and what does it have to do with your banking history?

Read on for the answer to these questions and many more.

ChexSystems: An Overview

Governed by the federal Fair Credit Reporting Act (FCRA), ChexSystems is the “credit bureau” for financial institutions. They operate in the same manner as the credit reporting agencies, like Equifax, Experian, and TransUnion.

But instead of providing credit data, they offer consumer disclosure reports that include historical data for closed checking and savings accounts. These reports help financial institutions determine if the applicant meets the qualification standards for a new bank account or if they should be denied due to the high level of risk they pose.

What’s In Your ChexSystems Report?

ChexSystems or FACTA reports contain the following components:

  • Consumer identification number
  • Personal information
  • Identity theft security alerts reported by the consumer
  • Security freeze history
  • Reported information related to past accounts that were mismanaged or resulted in an outstanding debt balance
  • Inquiries initiated by financial institutions
  • Inquiries initiated by the consumer
  • Check-cashing inquiries
  • Retail information
  • Check-ordering history
  • Social security number validation
  • Additional information or supplementary data

You can view a sample consumer disclosure report here.

How to Retrieve Your Free ChexSystems Report

You can access your consumer report on an annual basis, free of charge, by following the instructions below:

  • Phone- Call 800-428-9623. You will be directed to an automated voice messaging system where you can initiate your request.
  • Mail- Download and print the Consumer Request for Disclosure Form and send it to Chex Systems, Inc.

Attn: Consumer Relations

7805 Hudson Road, Suite 100

Woodbury, MN 55125

  • Fax- Submit the Consumer Request for Disclosure Form to 602-659-2197.
  • Online- Complete and submit the Consumer Request for Disclosure found here.

Free ChexSystems reports are also available to consumers who’ve been denied for a bank account due to the information contained in the report.

Can Anyone Access Your ChexSystems Report?

The short answer is no. in order for a third party to access your FACTA report, they must:

  • Have written permission by you to do so. This is usually the case when you apply for a bank account and you sign an application granting the bank permission to access resources, like ChexSystems, to help evaluate your application and make a decision. Both business and personal transactions also fall under this umbrella.
  • Be ordered to do so by the courts through an order or federal subpoena issued by the grand jury. Child support rulings by the court of law may also warrant the release of your ChexSystems report.

What to Do If Your ChexSystems Report Contains Errors

If your ChexSystems report contains inaccuracies, you have the right to have them rectified. But in order to initiate the process, you’ll have to file a formal dispute. This can be done via the following methods:

  • Online by completing the digital form and uploading supporting documents
  • By mail at Chex Systems, Inc., Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125
  • By fax at 602-659-2197

Should you decide to dispute your consumer report by mail or fax, be sure to include your full name, Social Security number, current and mailing address, and Consumer ID on all correspondence you send it. Your dispute letter should also clearly identify the item(s) in question and the reason it’s incorrect.

How to Contact ChexSystems

If you need more clarification about your ChexSystems report or the dispute process, you reach out via mail, fax, or phone. Their contact information is listed below:

Mail

ChexSystems, Inc.

Attn: Consumer Relations

7805 Hudson Road, Suite 100

Woodbury, MN 55125

*Phone

800-428-9623

Fax

602-659-2197

*(Please note that calling in will only route you to an automated menu that allows you to request your report or listen to responses to frequently asked questions. No representatives are available at the number to take your call).

ChexSystems: What It Means For Your Banking Options

Unfortunately, a shaky ChexSystems reports could spell big trouble when you apply for a checking or savings account. You could either be offered an account with less than favorable perks, like higher maintenance fees or minimum balance requirements or be denied for an account altogether.

Do All Banks Use ChexSystems Reports?

Before you have a complete meltdown, you should know that you aren’t banned from the banking world forever if you have less than perfect banking history. In fact, information reported only lingers for five or so years. Even better, some banks ditch ChexSystems altogether while others offer second-chance bank accounts. More on that shortly.

What To Do If You’re Denied for a Bank Account

Alternative Banking Solutions (or Non-ChexSystems Banks)

Worried that you won’t find a bank account that suits your needs because you’ve been denied on every turn? Take a look at what the non-ChexSystems banks have to offer:

  • BBVA Compass ClearConnect Free Checking
  • Navy Federal Credit Union
  • Suntrust Bank
  • United Bank

Quick note: while select banks don’t use ChexSystems to screen applicants, it’s possible that they run credit checks or use another similar service called Early Warning Systems during the evaluation process. So, it’s best to inquire with a banker before moving forward with your application.

Second-Chance Banking

You may also want to give banks that offer consumers another chance a try. These include:

  • BBVA Compass ClearChoice Free Checking
  • Capital One
  • USAA Free Checking
  • Wells Fargo

As mentioned earlier, you may have to pay higher maintenance fees or fork over more than normal for your opening deposit, but the benefits of second-chance banking usually outweigh the costs.

You should also know that these options may not be advertised to the public. Instead, you’ll need to go into the branch and speak with a banker about your situation. That way, they’ll be able to provide you with your options based on your banking history.

Prepaid Debit Cards

It’s not uncommon for consumers to want a bank account solely for the purpose of direct deposit or online transactions that require you to use a debit card. The good news is even if you’re unable to find a bank account that works for you due to ChexSystems issues, you can always use a prepaid debit card to get the job done.

While they are sometimes accompanied by higher fees and pose a bit more risk than traditional debit cards issued by banks, they have similar capabilities. And some prepaid debit card issuers allow you to personalize your card and receive direct deposits.

Can You Remove Accurate Negative Data From ChexSystems?

Are you being haunted by a slew of banking missteps from the past? Whether they resulted from a rough financial patch, carelessness, or honest oversight, it’s possible to have negative data removed from your ChexSystems report.

However, it’s not necessarily a good idea to reach out to ChexSystems and demand that they remove any negative information from your report. Instead, call up the bank and request that they remove the account in exchange for payment. If they agree, request that they provide their response to you in writing so you’ll have proof of the arrangement.

But if this approach doesn’t quite work out and the negative entries are older, you can try your hand at a dispute to see if the bank responds. Depending on the severity of the issue and age of the account, they may not bother and the information will be removed from your report.

The Bottom Line

It’s a good idea to be aware of how ChexSystems works and what’s listed in your FACTA report. That way, you’ll know what to expect when applying for bank accounts. And should you spot errors in your report in the future, you’ll know exactly what to do to have them resolved in a timely manner.

How to Remove a Charge-Off from Your Credit Report

Have you recently applied for credit, only to get turned down because of a charge-off that’s dragging your score down? Or maybe you recently reviewed your credit report and realized that a charge-off was there that you had no knowledge of beforehand. Either way, you want it removed promptly because it’s tainting your report, keeping your credit score in the trenches, and preventing you from qualifying for the most competitive financing offers on the market.

Keep reading to learn how charge-offs come about, how they impact your credit score over time, and what steps are needed to get them emoved from your credit report.

What is a charge-off?

A charge-off is reported on your credit report once an account reaches 180-days delinquent. This is also the point at which the creditor writes it off their books as a bad debt and turns it over to a collection agency.

Although the creditor or lender takes a hit to their books, they write the bad debt off to derive two key benefits:

  • The ability to write the outstanding amount off as a loss on their books
  • The possibility of still being paid, even if it’s only a portion of what they’re owed, after the account is written off

How does a charge-off impact your credit score?

Charge-offs can do major damage to your credit profile. Since they are one of the most impactful items that can appear on your credit report, your scores may plummet significantly.

Not only will a charge-off tank your score, but you may also find it harder to qualify for credit cards and loan products. And the products you do qualify for will more than likely be accompanied by exorbitant interest rates and less favorable financing terms.

Does paying off a charge-off boost your credit score?

Unfortunately, paying a charge-off will not make it magically disappear from your credit report. Instead, the creditor will update the status to paid in full or settled, and the account will remain until the seven-year window lapses. This also means it will continue to negatively impact your score until the negative entry is removed.

However, the older the charge-off, the smaller the impact on your credit score. But if you can get the creditor to delete the negative entry in exchange for payment, your score may increase. More on that shortly.

Should you pay charge-offs on your credit report?

It depends. If the creditor won’t agree to a pay-for-deletion or you’re close to the seven-year window being up, it may be worthwhile to wait it out. However, there are cases in which it may be a good idea to pay charge-offs on your credit report.

The case for paying charge-offs

Although your credit score may not skyrocket overnight, paying charge-offs could increase your approval odds for debt products by making you look more favorable in the eyes of creditors. In other words, you may be able to plead your case for being approved by explaining that you went through a rough patch but have taken the necessary actions to take care of past outstanding obligations.

Furthermore, paying the charge-off demonstrates that you have assumed responsibility for the financial misstep and are committing to better managing your finances in the future.

A few more key reasons for paying charge-offs:

  • The creditor has agreed to a pay-for-deletion, which means they will delete the account altogether once they have received the total outstanding amount in full or the settlement amount agreed on. (Note: always get these agreements in writing or you may find yourself chasing the collection agency or creditor after the fact to make them follow through on their promise. Also, keep in mind that their primary concern is collecting what’s owed and they’ll play nice guy until that’s done. So, it’s best to think a step or two ahead and cover your tracks with a paper trail).
  • You’re trying to buy a home and the mortgage company won’t approve the application until the charge-off is taken care of. You may be able to retrieve a preapproval for a new home purchase with an unpaid charge-off present on your credit report. But getting the loan closed with it still on your report will be practically impossible as most mortgage companies play by this rule. So, you should call and offer to settle the account so the status of the charge-off can be updated on your credit report.

But before remitting payment, contact the information furnisher and ask that they provide proof that you actually owe the debt. Remember, the credit bureaus must respond to your request or the item must be deleted. And if the charge-off is not yours, file a formal dispute to have it removed.

The case against paying charge-offs

There are instances where you know you owe on a particular account that has been charged-off, but it may not be in your best interest to remit payment. Most importantly, if the statute of limitations has passed and the debt is no longer legally collectible, don’t bother paying it. Instead, file a dispute with the credit bureaus to have it removed.

Some additional reasons to not pay charge-offs:

  • The corresponding information listed on your credit report contains inaccuracies. Creditors and collection agencies can’t just report whatever information they want on your credit file and expect you to pay it. Per the Fair Credit Reporting Act, the contents must be complete, accurate, and verifiable, or it must be corrected deleted. And more often than not, you may find that all it takes is a dispute for the charge-off to be deleted because the collection agency does not have the proper documentation on hand to verify the debt.
  • The charge-off appears multiple times on your credit report. Imagine if you paid the charge-off through one of the five collection agencies listed on your credit report, only to find out that you still owe the money. This is not uncommon as old debts are sometimes sold over and over without the paper trail to prove you actually owe it. So, paying it off only makes the situation worse as you’ll be out of your hard earned cash and still feel the wrath of the charge-off on your credit report.

What’s the easiest way to have a charge-off removed from your credit report?

When dealing with charge-offs, there are three ideal ways to go about getting them removed.

File a formal dispute with the credit bureaus

If it’s an error, dispute it as such. But what if the charge-off doesn’t belong to you? Simply dispute it using the information found here (this hyperlink will accompany a future post titled “Credit Dispute Letters”). Problem solved.

You can also give a formal dispute a shot if the debt has been passed from collection agency to collection agency and you feel there’s a chance they don’t have the proper documentation to prove you actually owe it.

Work directly with the collection agency

The first step is to reach out and have them send you documentation proving you owe the debt. Next, request that they delete the account from your credit report in exchange for payment through a pay-for-deletion arrangement.

It may take a few tries, but it’s well worth the effort. But be sure to get the agreement signed and in writing.

Hire a reputable credit repair company

Prefer to let the professionals handle the legwork for you? If so, hire a reputable credit repair company and they will work on your behalf to get the charge-off removed sooner than later. Though there are no guarantees on the timeframe or if they’ll even get results, the likelihood of success is much higher considering they’re seasoned, trained professionals that are well-versed in dealing with charge-offs.

The bottom line

The presence of a charge-off on your credit report is not the end of the world. And by taking the proper steps or hiring a reputable credit repair company, you can have it removed sooner than later.

How to Remove Late Payments from Your Credit Report

Life happened and you couldn’t make your credit card payments on time. Or maybe you got behind on your car note, student loans, or mortgage. Either way, the late payments are on your credit report and they’re dragging your score down.

Even if you’ve gotten back on track, it will still take some time for your score to revert back to what it was. The good news is it’s possible to have late payments from your credit report if you take the proper actions.

Read on to learn more.

How soon are late payments reported to the credit bureaus?

If you miss the due date on a credit card or loan by a few days, it’s not the end of the world. But once the account becomes delinquent by 30 days, a late payment fee isn’t the only thing you have to worry about.

The lender or creditor may choose to report it to the credit bureaus. And they will continue to do so at the 60, 90, and 120-day mark until the account is ultimately charged-off as a bad debt.

However, some lenders may be lenient with their reporting and wait until the account is 60 or 90 days delinquent update the status with the credit bureaus. This isn’t necessarily a bad thing as you’ll have more time to bring the account current before damage is done to your credit score. However, the impact of a 60 or 90-day late payment could be more detrimental.

How does a late payment impact your credit score?

Your FICO score is comprised of the following components:

  • Payment History: 35 percent of your FICO score
  • Amounts Owed: 30 percent of your FICO score
  • Length of Credit History: 15 percent of your FICO score
  • Credit Mix (i.e. revolving and installment loans): 10 percent of your FICO score
  • New Credit (i.e. applications for credit): 10 percent of your FICO score

Since payment history has the greatest impact, all it takes is one late payment to tank your credit score. And it doesn’t matter if it’s a minimum credit card payment of $25 or auto loan payment of $250.

According to Equifax, one late payment can reduce your score by up to 110 points. And the higher your score was before the late payment was reported, the greater the impact.

Furthermore, if the account continues to remain in a delinquent status, the impact to your score will be even greater. In fact, a late payment of 60 or 90 days can be as damaging to your score as a collection account or charge-off.

How long does a late payment stay on your credit report?

Late payments remain on your credit report for seven years. But the impact will start to dwindle over time. The good news is you don’t have to sit around with your fingers crossed desperately waiting for the day for your score to rise. There are ways you can have late payments removed before the seven-year mark.

What’s the easiest way to have a late payment removed from your credit report?

It’s possible to have a late payment removed from your credit report, and there are several ways to do so. However, there is not a one-size-fits-all approach when doing so. Instead, you have to consider the following:

  • Was the late payment reported in error?
  • Was it a one-time occurrence resulting from an oversight or technical issue?
  • Are there several late payments across the board that you want to have removed?

Your answer to these responses will determine the best course of action to increase your odds of having the late payments) removed.

File a formal dispute

Creditors and lenders deal with millions of accounts on a daily basis, so errors are bound to happen. If you’ve never made a late payment but the creditor reported otherwise, you’ll need to file a formal dispute with the credit bureaus to have it removed.

This will force the creditor to conduct research and ultimately discover that your payment was on time. And they will update your records to reflect the accurate payment history.

You can also try disputing the late payment, even if you know it’s being accurately reported, to see if the creditor will bother responding. There’s always a chance they won’t bother to respond within the 30-day window mandated by law and the negative entry will be removed. While this is a longshot, it could actually work in your favor if the other methods listed below don’t quite pan out for you after several attempts.

Request a goodwill adjustment

Did the account fall behind due to sheer oversight? Or maybe you thought you made the payment but discovered it was never processed once the account popped up as delinquent on your credit report a month or so later? On the other hand, you could have been in the midst of a rough financial patch that made remitting a timely payment practically impossible?

Regardless of your reasoning for being late, you have a good chance of having the item removed if it was a one-time occurrence. Simply reach out to the creditor, plead your case, and request a goodwill adjustment. This can be done on the phone or in writing, but the latter is preferred so you’ll have a paper trail.

When pleading your case, be as specific as possible. Explain that this is out of the ordinary and highlight the fact that you’ve been a responsible customer for quite some time. Also, be prepared to move up the ladder if your request is rejected.

You can also strengthen the odds of having your request approved by asking to enroll in auto-pay. Doing so not only ensures that history won’t repeat itself on your end, but provides the creditor reassurance that it was an error on unusual occurrence on your part and that you’re committed to making timely payments going forward.

Hire a reputable credit repair company?

Would it be easier to let a professional do the work for you? If so, consider hiring a reputable credit repair company to get the results you’re looking for. (insert link to “Best Credit Repair Companies of 2018”)

There are many options out there that offer free consultations, low monthly rates, and month-to-month contracts with no cancellation penalties. While you may be hesitant to invest in credit repair services, the investment is substantially lower than what you could find yourself paying in interest due to your subpar credit score.

The bottom line

Whether you decide to take matters into your own hands or hire a credit repair company, your credit score will benefit greatly from having late payments removed from your credit report. Plus, you’ll have a peace of mind knowing that those mistakes or financial hardships are behind you as you continue working towards attaining a stellar credit rating.

How to Remove Collections from Your Credit Report

Are you looking to repair your credit but don’t quite know how to handle those unpleasant collection accounts sitting on your credit report?

Working with collection agencies to resolve the issue can be difficult if you don’t take the proper steps. And even if you decide to pay the balance in hopes that it’ll go away, you may be surprised later on down the line when you realize your score doesn’t improve.

Let’s take a closer look at how collection accounts work, the impact they have on your credit score, and what you can do to have them removed. We’ll also discuss how to handle medical collection accounts.

What are collection accounts?

Collection accounts appear on your credit report once a creditor or lender determines that they probably won’t be able to collect on the past due amount owed. While they take a financial hit, the creditor or lender is allowed to take a loss and can write this amount off on their tax return.

Unfortunately, this is bad news for you as your score will more than likely tank, possibly by up to 100 points. In addition, you may be forced to deal with aggressive debt collectors who are anxious to sap your hard earned money from your wallet.

Wondering what types of collection accounts are most common? They include:

  • Utility accounts (i.e. water, sewage, electricity, gas, trash)
  • Cable accounts
  • Cell phone accounts
  • Credit card accounts

So, if you relocate and forget to pay the final cable or utility bill, don’t be surprised if a collection account shows up on your credit report. The same rule applies for cell phone and credit card accounts that are closed with an unpaid balance that the service provider or credit card issuer deems uncollectible.

How do collection accounts impact your credit score?

Thanks to updates made to the FICO scoring model, unpaid and paid collections no longer impact your credit score the same. Under FICO 8 and VantageScore 3.0, the only major benefit to paying off a collection account was the status update. It communicated to prospective creditors and lenders that you had paid the outstanding amount in full or settled the account for an amount that was acceptable to both parties. However, the negative effect on your score lingered.

But under FICO 9 or VantageScore 4.0, paid collection accounts are not considered in credit scoring. This is a major benefit because you no longer have to worry about an old or small collection account dragging your score down, even after you’ve taken care of it.

How long do collection accounts stay on your credit report?

Collection accounts are reflected on your credit report for seven years. And unfortunately, paying it off won’t make it go away. Instead, the collection agency will simply update the status to paid in full or settled.

But as mentioned before, FICO 9 and VantageScore 4.0 overlook paid collection accounts, so your score won’t take a hit if the lender uses this model.

Reporting timeline vs. statute of limitations

It’s important to understand the difference between the reporting timeline and statute of limitations when dealing with collections. While the creditor can report the account for up to seven years, they are limited on the time in which they can sue you for the delinquency. This is referred to as the statute of limitations and varies by state.

The statute of limitations in some states is four years, according to NOLO. But you may find that this period is much longer in your state of residence.

What’s the easiest way to have collection accounts removed from your credit report?

Because lenders are starting to adopt FICO 9, it may be in your best interest to pay the outstanding collection account so it won’t continue to impact your credit score. But what if you can’t afford to do so?

Or maybe you need to have the collection account removed to qualify for a debt product with a lender that hasn’t yet adopted FICO 9?

Ask the collection agency to validate the debt

Is the collection account listed with more than one collection agency? If so, there’s a high possibility the file has been passed around and is missing the adequate documentation from the creditor to prove that you actually owe the debt.

For this reason, you should submit debt validation letters to the collection agencies. You can do so by filing a dispute with each of the credit bureaus to ensure you get a response within 30 days. If they don’t respond to your request, the item must be removed from your credit report.

Negotiate a pay-for-deletion

What happens if the collection agency can actually validate the debt? The next step is to request a pay-for-deletion. In a nutshell, this arrangement states that the information provider (or collection agency) will remove the account from your credit report in exchange for payment.

These types of arrangements are becoming less common, so you’ll have to be more persistent. But don’t be fooled into thinking it can’t be done. Collection agencies will tell you that it’s against the rule to remove the mark, but it’s not as they’re the ones who reported the account to the credit bureaus in the first place.

Also, be sure to get the arrangement in writing to ensure the collection agency follows through on their promise. Otherwise, you’ll be left with less cash and a negative mark on your report.

Hire a reputable credit repair company

Some collection accounts are much trickier to deal with than others. And if you aren’t knowledgeable of credit repair and how it works, it may be in your best interest to leave the work to the professionals.

For a monthly fee, they can handle the entire process from start to finish. They can also work with you to have collection accounts removed if they are questionable or being reported incorrectly. Best of all, you can get started with most credit repair companies without forking over any money because they offer free consultations to explain the ways in which they can help you.

Dealing with medical collections

Are medical collections dragging your credit score down? Fortunately, the damage is not as significant under FICO 9. And once these accounts are paid off, they no longer impact your FICO score.

While you’ll have to take the same steps as listed above to have medical collections removed from your credit report, the good news is a new rule makes it much more difficult for accounts to be reported in the first place.

In fact, service providers have to wait for at least 180 days before the account can be placed on your credit report. And in the event your insurance company decides to pay the bill after the fact, the collection accounts must be removed, notes Times.

This is a major plus for consumers for two primary reasons. First, it gives them more time to enter into a payment arrangement with the medical provider. It also leaves an ample amount of time for the insurance claims processing to be completed.

The bottom line

Credit reports without collection accounts are much more appealing in the eyes of creditors and lenders. But if what you’re looking for is a higher credit score, paying or settling the account may be enough to yield results if the lender has adopted the updated FICO 9 or Vantage 4.0 credit scoring model.

Either way, by being diligent and doing the legwork, you can get the collection account removed or pay the balance to give your credit score a boost.

How to Remove a Bankruptcy from Your Credit Report

Each year, scores of individuals file for bankruptcy. And unfortunately, the damage to their credit score is catastrophic. In fact, the impact is so severe that credit scores will still suffer even if the debtor has paid off what they owe.

The good news is there are ways to get a bankruptcy removed from your credit report. You can also take specific actions to start boosting your credit score right away.

Keep reading to learn more.

How does filing for bankruptcy impact your credit score?

Bankruptcies are one of the most detrimental items that can appear on your credit report. Like judgments and tax liens, they report as a public record and tank your credit score.

If your credit profile was stellar and you had a high FICO score prior to filing for bankruptcy, you should “expect a huge drop in [your] score,” according to myFICO. But if your credit was already in the trenches due to the presence of negative items on your report, you would probably “only see a modest drop in [your] score,” the article adds.

The more accounts included in the bankruptcy filing, the greater the impact on your score. Why so? These accounts will report for seven years from the original date of delinquency. And the impact is the same even if they get discharged through bankruptcy.

(Quick note: Have you recently filed for bankruptcy? Are the accounts included in the filing reported accurately? If not, send dispute letters to each of the credit bureaus to have the issue rectified. Be sure to specify which accounts are incorrect. Also, include the schedule of debt covered under the filing. And if applicable, attach any supporting documentation to substantiate your claim).

Your credit score will start to bounce back over time, and it may not take as long as you think. This is due to the fact that discharged debts are no longer owed. This means your credit utilization ratio will now be much lower. And since amounts owed account for 30 percent of your credit score, you will start to see small increases as creditors update the balances.

But if can get the bankruptcy removed from your credit report, that means good news for your credit score much sooner than later. More on that shortly.

How long will the bankruptcy remain on your credit report?

Discharge date vs. reporting timeline

The length of time that the bankruptcy reports depends on the type you file. The rules are as follows:

  • Total Discharge or Chapter 7- up to 10 years from the date of filing
  • Reorganization or Chapter 11- up to 10 years from the date of filing
  • Repayment Plan or Chapter 13- completed bankruptcies; usually takes 3 to 5 years)- up to 7 years from the date of filing

But individual accounts included in the filing report for seven years. This is the case even if you filed under Chapter 7 or 11.

Is it possible to remove a bankruptcy from your credit report?

Removing a bankruptcy from your credit report takes quite a bit of persistence. But it’s not impossible. You have two options to move forward:

Do-It-Yourself

You can dispute bankruptcies with the credit bureaus. You’ll need to write a letter to plead your case (i.e. inaccurate information). You can also request that the credit bureaus verify the bankruptcy. They have 30 days to respond or the credit bureaus must delete the entry from your credit report.

But what if they do respond without providing proof that they actually verified the debt? Retrieve a written statement from the court to prove the credit bureaus failed to verify the bankruptcy. You would then send this information on to the credit bureaus to have the bankruptcy removed from your credit report.

When working to get the bankruptcy removed from your credit report, you should also address the associated collection and charge off accounts that were apart of the bankruptcy proceedings. The fewer negative entries on your credit report, the better..

Hire a reputable credit repair company

Are you uncomfortable with the dispute process or strapped for time? It may be worthwhile to hire an experienced, reputable credit repair company to do the legwork for you. They possess the knowledge to work towards having the bankruptcy removed in the shortest amount of time possible. Reputable credit repair companies will also address other negative items on your credit report to give your score the best possible chance of recovering from the damages sooner than later.

Tips to help rebuild your credit after bankruptcy

If you’ve already felt the wrath of bankruptcy, chances are you’re not feeling too optimistic about your future credit score. However, the good news is filing for bankruptcy won’t haunt you forever, and the odds of rebuilding your credit are definitely in your favor.

Of course, having the bankruptcy removed from your credit report is the easiest way to get your credit back on track in the shortest period possible. You can also take the following actions to boost your score:

Clean up your “financial” act

There are a number of reasons why you may have been forced to file for bankruptcy. But what’s most important when rebuilding your credit is not the culprit, per se, but making sure that history doesn’t repeat itself. In other words, you want to establish a solid plan for your finances to make your money work for you. In your list of objectives should be creating a realistic budget that keeps your spending in check, safety net, and plans to eradicate debt that wasn’t included in the filing.

Confirm accounts included in the filing are updated

As mentioned earlier, debts discharged in bankruptcy should be updated to reflect a zero balance. This will automatically give your score a small boost because your credit utilization ratio will plummet.

So, you want to access a free copy of your credit report from AnnualCreditReport.com and confirm accounts that were included in the filing are being reported accurately. If not, file a formal dispute with the credit bureaus to have the accounts rectified.

Stay on top of your credit report

Is your credit score an accurate representation of your credit history or are errors dragging your score down? While the bankruptcy probably took a toll on your score, there’s a possibility that other inaccurate or untimely information is in your credit report and impacting your credit rating.

For this reason, you should review your report regularly to ensure all the information contained is accurate and untimely. And should you find issues, dispute them with the credit bureaus promptly.

As mentioned earlier, you can access free copies of your report once a year from the three credit bureaus through AnnualCreditReport.com. It’s also a good idea to stay on top of your credit report and activity through a free credit monitoring service, like Credit Karma, Credit Sesame, or WalletHub.

Apply for a credit builder loan

While working to have the bankruptcy removed, you can also apply for a credit builder loan through your financial institution or local credit union. Credit builder loans require a deposit into a savings account that is equal to the loan amount. The financial institution reports payments to the credit bureaus and the funds are accessible once you pay the loan off.

You can also use Self Lender, which only requires a small administrative fee upfront and monthly payments until the loan is paid in full. In a nutshell, they take the loan amount and deposit it into a certificate of deposit. Payments are reported to the three credit bureaus to help you establish a positive credit history. And at the conclusion of the loan term, you can withdraw the funds or choose to roll them over into another credit builder loan product.

Get a secured credit card

If you don’t mind making an initial deposit to access your credit line, a secured credit card may be right for you. They’re another great way to help rebuild your credit after bankruptcy and function just like unsecured credit cards. However, they sometimes come with hefty APRs and administrative fees. And the creditor holds your deposit until the account closes or the creditor extends an unsecured credit card offer to you.

Be sure to make timely payments on any new debt or credit products

Since late payments account for 35 percent of your credit score, you can’t afford to not make timely payments on credit products when you’re trying to rebuild your credit after bankruptcy. Why so? Well, all it takes is one late payment to plummet your score between 90 and 110 points, notes Equifax.

The good news is creditors won’t report past due accounts until they’re delinquent by over 30 days. So, besides the fee that you’ll incur, a payment that’s a few days late isn’t the end of the world.

Manage new credit responsibly

Amounts owed account for 30 percent of your credit score, and the lower your credit utilization, the better. This means you should manage new credit responsibly by using any new revolving credit sparingly. Aim for a credit utilization ratio of 30 percent or lower.

The bottom line

Filing for bankruptcy doesn’t mean your finances and credit score won’t recover. And by taking the right steps, you can have it removed from your credit report and start rebuilding your score sooner than you think.

How to Remove a Foreclosures from Your Credit Report

Since the housing crisis of 2008, the number of foreclosures has decreased. However, there are still enough to be a cause for concern, despite the improvement in market conditions. And maybe your financial wellbeing is suffering from a recent foreclosure.

Or perhaps your home wasn’t foreclosed because the lender allowed you to “short sell” it for less than what you owed? The impact on your credit score for either negative entry is similar. And you’ll follow the same protocols to have them removed.

How do foreclosures and short sales impact your credit score?

Unfortunately, foreclosures and short sales are detrimental to your credit report. Your score will drop by at least 100 points as soon as the negative entry is reported.

You must also consider the impact of foreclosures and short sales have on your credit score before they are reported. Because you’ll have skipped making payments for at least 90 days, the lender will report late payments to the credit bureaus. And these entries will also tank your score by between 90 and 110 points.

Fortunately, there are ways to start rebuilding your score even before the foreclosure is removed or ages off your credit report. (More on that shortly).

How long will a foreclosure or short sale remain on your credit report?

Both foreclosures and short sales remain on your credit report for seven years. As mentioned in the previous sections, the initial impact to your credit score will sting. But expect your score to start rebounding as time progresses as long as you manage all other components of your credit profile responsibly.

During this time period, you may also experience several other negative consequences, including:

  • Lower approval odds when applying for new credit
  • Higher interest rates on your existing credit card products (which results from the change in your credit rating)
  • More expensive insurance premiums if applying for new coverage
  • Higher security deposits for rental properties and services, like utilities and cell phone service
  • Disqualification from the pool of candidates for your dream job if the employer requires credit screenings as a part of the background check

Is it possible to remove a foreclosure or short sale from your credit report?

The burden of proof is on the lender to verify that the foreclosure is accurate.

If they don’t have the original records on hand or are no longer in business, you may have a strong case to have the foreclosure removed. You can also have it removed if there are inaccuracies in the entry on your credit report.

But to have it removed, you must decide between the DIY approach or hiring a reputable credit repair company to do the work for you.

Do-It-Yourself

The foreclosure entry may not be the same across the board, so it’s important to review the details on each credit report before drafting up dispute letters. Also, keep in mind that you’ll need to send dispute letters to each credit bureau as they do not communicate with one another.

When drafting up your dispute letter, you can take one of the following approaches:

  • File a formal dispute with the credit bureaus requesting that the lender verify the foreclosure. As stated earlier, the information furnisher or lender must be able to provide adequate documentation to prove that the foreclosure is indeed valid. If they are no longer in business or are unable to locate your records, that means they cannot furnish information needed to the credit bureaus within 30 days. And as a result, the foreclosure entry must be removed from your credit report.
  • Point out inaccuracies with the entry on your credit report in the dispute letters sent to the credit bureaus. If any of the information related to the foreclosure is listed incorrectly in your credit report, it must be updated or removed within 30 days. This includes the name of the lender, account number, and balance at the time of foreclosure.

Hire a reputable credit repair company

Do you prefer to leave the foreclosure removal process to the professionals? Consider hiring a reputable credit repair company to handle this task for you. They have the tools, experience, and expertise to work with the credit bureaus and lenders so you have the best chance of success with the removal.

Can you purchase a home after a foreclosure or short sale?

Considering purchasing a home even though you’ve gone through a foreclosure or short sale? Some important considerations:

  • If the foreclosure or short sale is removed from your credit report and are using a different lender, you probably won’t have any issues qualifying for a new mortgage no matter the time frame. This is because your score is probably above the qualification criteria and they have no knowledge of your history.
  • If the foreclosure or short sale is still on your credit report, expect to wait at least two years before qualifying for a mortgage. But even if you meet the minimum credit criteria after this period and have the income to back it up, the lender may offer you a higher interest rate. They may also ask for a higher down payment, and your PMI may be much higher (if you put less than 20 percent down).

Tips to help rebuild your credit after a foreclosure or short sale

Manage existing credit responsibly

The presence of a foreclosure on your credit report doesn’t mean existing creditors will automatically shut off your credit cards. And they definitely won’t ax your car loans. Yes, your credit card issuer may increase your interest rate when your score drops, but you should continue to keep balances below so your score can benefit from responsible debt management.

Remember, amounts owed account for 30 percent of your credit score. So a debt utilization ratio of 30 percent or lower on revolving credit is ideal.

Make timely payments on all other outstanding debts

Not only should you keep balances low, but you also want to make sure you stay current on all your outstanding debt. The last thing you need is a 30-day late payment mark or new collection account reported on your credit profile.

Refrain from applying for new credit

Each time you apply for credit, a hard or voluntary inquiry appears and decreases your score between two and five points. The inquiry remains on your report for 24 months and your score usually recovers rather quickly. However, multiple applications for credit (with the exception of rate shopping for a loan) will do damage to your score. So it’s best to refrain from applying for new credit when you’re trying to rebuild your credit after a foreclosure.

Apply for a credit builder loan or secured credit card

You can try applying for a credit builder loan or secured credit card. These products cater to borrowers with less than perfect credit scores. They also report payment history to strengthen your credit score. The only drawback is that the security deposit requirement (equal to the loan amount or credit line) to open the account.

The bottom line

It may take some time to have a foreclosure removed from your credit report. But being persistence may lead to the results you seek. You can also reap the benefits of an increased credit score by managing all your other debt responsibly.

How to Remove a Repossession from Your Credit Report

Did you hit a rough financial patch and fall behind on your auto loan payments? Depending on the loan agreement and your state of residence, the lender has the right to repossess your vehicle right away. And if they exercised their right to do so, you may be dealing with a low credit score. Or you could be desperately searching for ways to have the repossession removed from your report.

How do repossessions impact your credit score?

For starters, the lender will report the repossession to the three credit bureaus. Once it hits your report, expect your score to drop by at least 100 points. You score willl also drop when the account goes to the collection agency.

How long will a repossession remain on your credit report?

A repossession will remain on your credit report for seven years. However, the impact will start to diminish over time as long as you manage your other credit accounts responsibly. But although your score will start to improve, you may still struggle to qualify for credit and loan products in the future.

Why so? Simply put, a repossession is one of the most severe negative items that you can in your credit report. In turn, lenders automatically assume that your chances of default are significantly higher. And they may offer you debt products with steep interest rates and less favorable terms or reject your applications for credit altogether.

For these reasons, it’s best to work towards removing the repossession from your credit report. You may also want to take specific actions listed later in the article to start rebuilding your credit rating.

Is it possible to remove a repossession from your credit report?

It is possible to remove a repossession from your credit report, but it may take a bit of legwork to get results. And you should also know that whether it was voluntary or involuntary, the impact on your credit is still the same. But for the latter, not all approaches to have it removed could work.

  • Work directly with the lender: if the loan wasn’t reinstated and you still owe the lender, they may remove the repossession from your credit report in exchange for payment. This is known as a pay-for-deletion. You may also have luck with this approach if the loan was reinstated or redeemed, so it doesn’t hurt to reach out to the lender to give it a try.
  • Do-It-Yourself: You can also submit dispute letters to the three credit bureaus asking the lender to verify the repossession. If you don’t receive a response within 30 days, they must remove the negative entry from your credit report.
  • Hire a reputable credit repair company: You can save your time and energy by letting the credit repair professionals do the work for you.

An important note

Even if you’re able to successfully remove the repossession from your credit report, you may still be on the liable to the lender for the outstanding balance or deficiency plus any accompanying fees. This amount is determined by the difference between what you owed and what the lender was able to recoup from the sale of the vehicle.

If the lender decides to sue you in court, your score will incur even more damage as a judgment for the amount owed will be reported on your credit profile.

Will a repossession automatically disqualify you for an auto loan?

Fortunately, a repossession on your credit doesn’t mean that you have no chances of getting an auto loan. The downside is that you may have to deal with subprime lenders to obtain a loan. This means fewer options to choose from, steep interest rates, and less favorable financing terms.

Tips to help rebuild your credit after a repossession

Reinstate or redeem the vehicle

If the repossession is recent, you may be able to reinstate or redeem the vehicle. This could minimize the impact on your credit score. Whether you decide to bring the loan current (and cover all the associated fees of repossession, also known as reinstatement) or purchase the vehicle by paying what’s owed in full (also known as redemption), you won’t have to worry about dealing with collection agencies and having them report the account on your credit report.

Make timely payments

The way in which you handle credit and debt payments have the greatest impact on your credit score, to the tune of 35 percent. For this reason, you want to pay all your bills on time to help give your credit score the best possible chance of recovering from the repossession.

Keep debt balances low

The amounts owed or credit utilization ratio accounts for 3o percent of your credit score. So, try to keep the credit card spending and balances to a minimum.

Apply for a credit-builder loan

Credit-builder loans are another great way to have positive payment history reflected on your credit report. You will make monthly payments until the loan is paid in full, and each payment will be reported to the credit bureaus. The money is also yours to keep once the loan term is complete.

Open a secured credit card

Similar to a credit-builder loan, secured credit cards help boost your credit score by reporting positive payment activity to the credit bureaus. However, you must pay a security deposit equal to the credit limit to open an account. And your funds will be tied up until you close the account or the credit card issuer converts it to an unsecured account.

How to Remove a Tax Lien from Your Credit Report

In a nutshell, a tax lien is filed against your property when you don’t take care of your tax debts, notes the Internal Revenue Service (IRS). The filing, which is referred to as a Notice of Federal Tax Lien, is used as a means to communicate to creditors that the government has first dibs on your assets and property to recover the debt owed to them.

How do tax liens impact your credit score?

Tax liens have serious implications for your credit score, and you should expect a steep increase of 100 or so points, if not more. But the impact on your credit score is the least of your worries.

The low credit score resulting from the tax lien makes it harder to qualify for the best interest rates, could possibly disqualify your a job, raise your insurance rates, or trigger higher deposits. But a tax lien placed against you by the IRS also means that they can legally seize your property and sell it to cover your tax obligation.

In other words, any personal assets, real estate, financial accounts, or business assets and real estate you have could become their property. Even worse, lenders may be reluctant to extend credit to you because not only do you pose an elevated risk, but they could lose out big time if you default as the IRS will have first dibs to your assets.

How long will a tax lien remain on your credit report?

Paid tax liens

If you pay your tax lien in full, it will remain on your credit report seven years from the date the lien is paid in full.

Unpaid tax liens

Unlike other negative items that drop off your credit report after seven or ten years regardless of their status, unpaid tax liens remain indefinitely.

An important note

You should be aware that the IRS does not report tax liens to the credit bureaus. Instead, they appear as a public record. In addition, tax liens are not dischargeable in bankruptcy.

Is it possible to remove a tax lien from your credit report?

While it’s possible to have a tax lien removed from your credit report, don’t bank filing a dispute and it automatically being removed due to a lack of response from the government.

Request a withdrawal

One of the most effective ways to go about having a tax lien removed from your credit report is by requesting a withdrawal. According to IRS.gov, “A “withdrawal” removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property.”

To file a withdrawal, you’ll need to complete IRS Form 12277. The eligibility requirements are as follows:

  • You have entered into a DirectDebit Installment agreement
  • Your outstanding tax liability is $25,000 or less
  • You’ve remitted at least three consecutive payments via direct debit
  • You’re in good standing on your current Direct Debit Installment agreement and have not let any of your prior agreements lapse

To complete Form 12277, you’ll need to provide the following information:

  • Identifying information (i.e. name, address, Social Security or Employer Identification Number)
  • A copy of Form 668: Notice of Federal Tax Lien (You can also provide the serial number, date, and office where the initial Form 668 was recorded)
  • Status of the federal tax lien (i.e. open, released, or unknown)
  • The reason you are requesting a withdrawal
  • A written statement to substantiate your request

But you should know that a withdrawal doesn’t get you off the hook for what you owe. Instead, it simply removes the lien from your credit report so your score can start recovering sooner than later. (And it’s only available for those who aren’t under a settlement agreement). Furthermore, it lowers your level of riskiness in the eyes of creditors.

You may want to pay the lien in full and request that it be removed after the fact. However, this will be recorded by the IRS as a release and will still be reported for seven years from the date the lien was paid in full.

Seek professional help

Does the thought of working with the IRS to get a withdrawal or submitting written requests to the credit bureaus to have the tax lien removed frighten you? If so, the investment made when seeking professional help will be well worth the outcome.

Tips to help rebuild your credit after a tax lien

You can take the following actions to start rebuilding your credit after a tax lien:

  • Make timely payments on all other debt and credit products
  • Keep balances on revolving credit (i.e. credit cards) at 30 percent or lower
  • Maintain a healthy mix of revolving and installment credit
  • Refrain from applying for new credit
  • Don’t close any of your existing credit cards
  • Apply for a credit builder loan
  • Consider opening a secured credit card

By taking these actions, you will start to see your score climb. And once the tax lien is removed, expect it to be at the same level or higher than it was before the lien appeared on your credit report, assuming no other serious delinquencies are present.

The bottom line

Tax liens can have harsh consequences for your credit and finances. But there are several methods available to have them removed. And by managing your credit accounts responsibly, you can start to see improvements to your credit score sooner than later.