Sample Cease and Desist Letter

Calls from debt collectors got you down? If you’re in a financial bind and can’t afford to negotiate settlements to take care of the debts you owe, you may be tempted to change your number so they can think you disappeared off the face of the Earth. A better option: draft up a cease and desist letter to bring the calls and letters to a halt.

Keep reading to learn more about how they work, potential drawbacks you should be aware of, and how to draft up your own cease and desist letter to send to debt collectors.

How Do Cease and Desist Letters Work?

When you’re fed up with debt collectors and no longer want to hear from them, you can send over a cease and desist letter. It’s a formal request that requires them to stop reaching out regarding the debt you allegedly owe.

An important note: cease and desist letters only work with third-party debt collectors. If the original creditor has an in-house team that makes calls and sending out letters in an attempt to collect on the debt, a cease and desist letter won’t do anything to impede their efforts.

Are Cease and Desist Letters Effective?

While cease and desist letters are an effective remedy to the frustration, anger, and guilt caused by constant calls and letters from debt collectors, they do come with drawbacks that you should also consider.

Benefits of Cease and Desist Letters

  • Could halt collection efforts forever: If the debt is minimal or the collection agency feels the costs of collecting on the debt will outweigh the benefits, they may decide to move on. In this case, the debt will remain on your credit report until the reporting timeline lapses, but they will no longer attempt to contact you.
  • Peace of mind: Do you toss and turn at night thinking about debt? Or maybe you’re stressed out throughout the day and the constant calls and letters from debt collectors make it difficult to function like a normal person and get through the day? Requesting that all forms of communication be stopped through a cease and desist letter could give you the peace of mind needed to focus on what you need to accomplish. While it’s a risky move, it beats having anxiety attacks and restless nights.

Drawbacks of Cease and Desist Letters

  • Could accelerate collection efforts: As mentioned earlier, receiving a cease and desist letter could cause the debt collector to abandon the debt and move on. But there are no guarantees that they won’t sell it off to another debt collector. In fact, they can do so without violating the law, and this could mean even firmore calls and letters for you. (This also means you’ll have to send out a new cease and desist letter to the new collection agency to make the calls and letters stop). On the other hand, the debt collector could decide that it’s a worthwhile investment to pursue a lawsuit against you to collect what’s owed. This could result in a major financial blow to your wallet as you could be forced to pay through wage garnishments.
  • More damage to your credit report: Accelerated collection efforts also have serious implications for your credit report. If the debt is sold to another collection agency, you’ll receive another negative mark on your credit report, which dings your credit score once again. And if the debt collector sues you in the court of law and a judgment is issued, you’ll also incur more damage to your credit report and score.

Writing a Cease and Desist Letter

Are you ready to draft up a cease and desist letter to stop the constant calls and letters once and for all? Be sure to include the following components:

  • Your name and address
  • The debt collector’s name and address
  • Date
  • Account number associated with the debt (provided by the debt collector)
  • A formal request to cease all contact with you, per the FDCPA
  • Your next course of action if the contact doesn’t stop

When drafting up the letter, use language that is objective but professional. And refrain from discussing whether or not you owe the debt. The last thing you want to do is admit that you owe the entire balance or even a portion of it. Your goal is to make the debt collector stop contacting you, which can be accomplished by this letter is drafted correctly.

The letter should be sent to the debt collector via certified mail with a return receipt so you’ll know when it arrived at the collection agency’s office. Also, be sure to send a copy of the letter and keep the originals for your records.

What Happens When You Send a Cease and Desist Letter?

Once the collection agency is in receipt of your letter, they are only permitted to contact you a final time notifying you of their next course of action. Depending on the type of debt and the amount owed, they could choose to step up their collection efforts by suing you in the court of law. Or they may choose to ignore the debt altogether.

Either way, you should no longer hear from them. And if you do, the debt collector could be in direct violation of the federal Fair Debt Collection Practices Act.

Sample Cease and Desist Letter

(Your name)

(Your address)

(Debt collector’s name)

(Debt collector’s address)

(Today’s date)

Re: (Account number)

Dear (Debt collector’s name):

Per my rights under the Fair Debt Collection Practices Act (FDCPA), I hereby request that you cease all communication with me, my relatives, or friends in relation to this or any other alleged debts you claim I owe.

If you fail to acquiesce to this request and continue to initiate contact to collect on the alleged debt, I will proceed with filing a formal complaint to the (insert your state of residence) Attorney General’s office. I will also submit a grievance to the Federal Trade Commission.

In addition, I will seek civil and criminal damages in exchange for your violation of my rights under the FDCPA.

Sincerely,

(Your name-typewritten)

Tips to Deal With Debt Collectors

Has a debt collector has been breathing down your back and using ridiculous tactics to get your attention? You should know that you have rights that they could be in direct violation of. Under the federal Fair Debt Collection Practices Act, debt collectors are prohibited from:

  • Contacting you before 8 am or 9 pm unless you explicitly give them permission to do so
  • Calling you at work if you’ve asked them to refrain from doing so
  • Divulging any details related to the debt with anyone you know (outside of your spouse)
  • Using harassing or deceptive language or tactics when contacting you

Violations of the FDCPA should be reported to the Consumer Financial Protection Bureau, the Federal Trade Commission, and the state attorney general’s office in your state of residence. You can also file a lawsuit again the debt collector in the state or federal court of law within a year of the violation, notes FTC.gov.

Sample Debt Validation Letter

Is a collection agency pestering you about a debt you don’t think you owe? You can either pick up the phone and give them a tongue lashing, demand more information, or ignore the calls altogether. Or, you can take the high road and send them a debt validation letter.

How Do Debt Validation Letters Work?

A debt validation letter is a written request sent to the creditor or collection agency by the consumer requesting that they prove they can legally collect on the debt. In other words, you are asking that they provide evidence that the debt is valid, belongs to you, and is not outside of the timeframe, or statute of limitations, in which they can collect the outstanding balance owed.

The burden of proof is on the creditor or collection agency to substantiate their claim when you submit a debt validation letter. But if they fail to respond to your letter, you can follow it up with a dispute letter to the credit bureaus requesting that the account be removed from your credit report.

Are Debt Validation Letters Effective?

The Federal Fair Debt Collection Practices Act (FDCPA) requires that debt collectors send you a written notice validating their rights to collect on the debt. This should be done within five days of the initial contact they have with you.

But if you never received it, you shouldn’t have a problem receiving a response this time around as they debt collector is aware that not responding could result in them forfeiting their opportunity to collect on the debt altogether if you take it up a notch and notify the credit bureaus. Furthermore, they are in direct violation of the FDCPA for not responding and could face harsh penalties.

Writing a Debt Validation Letter

You can’t just draft up a letter demanding that collection agency prove that you owe them. Instead, you want to use a professional tone and include the following information:

  • Your name and address
  • The date of initial contact made by the collection agency (if applicable)
  • A request for more detailed information, including the name of the original creditor and supporting documentation to prove you actually owe the debt
  • The most recent billing statement the collection agency received from the original creditor
  • A copy of the original contract between yourself and the original creditor

Also, refrain from mentioning any intentions to repay the debt. And be sure not to offer any language that suggests you owe the debt.

Where to Send Debt Validation Letters

Since you’re technically not disputing the debt, your letter should not be mailed to the credit bureau. Instead, you’ll want to send it directly to the collection agency via certified mail with a return receipt. This way, you’ll have proof of when the letter arrived and can start the countdown to receiving a response.

And as mentioned earlier, in the event they don’t respond, you can file a formal dispute with the credit bureaus. In the dispute letter, you can cite the collection agency’s failure to respond to your request as grounds for removal of the collection account from your credit report.

Some Important Tips

  • Don’t bother if the statute of limitations for collection is almost up. Remember, the impact on your credit score will diminish as the collection account ages. And even if there’s some time left for it to be reported, you won’t have to worry about the debt collector chasing you down after the statute of limitations has passed. But if you go forward with the debt validation letter, you could awaken the sleeping beast.
  • Use the letter to your advantage to buy time. Has the debt collector contacted you for the first time regarding the account recently? If you respond in writing using a debt validation letter within 30 days, all collection efforts must come to a halt until they can provide proof that the debt is yours and they have the right to collect on it.
  • Debt validation letters may also be effective for credit repair if the account has been passed from agency to agency. This usually means that documentation has slipped through the cracks and they won’t be able to prove you owe them.

But if you don’t receive a formal response, don’t hesitate to file a formal dispute to have the item removed from your credit report. It also doesn’t hurt to file a formal grievance with the Consumer Financial Protection Bureau. This is sure to get the collection agency’s attention and could result in hefty fines and penalties.

Sample Debt Validation Letter

(Name)

(Address)

(Today’s Date)

(Debt collector’s name)

(Debt collector’s address)

Re: (Account number provided by the debt collector, if applicable)

To whom it may concern:

This letter is in reference to an attempt by your company to collect a debt. The date of initial contact was (insert date here), and you reached out via (phone or mail) inquiring about (insert details provided by the debt collector to you about the debt).

In order to fully understand your request, I’m asking that you provide me with a written response that includes the following:

  • Information pertaining to the creditor that the debt is owed, including their name, physical address, and phone number. If there are multiple creditors or collection agencies associated with the debt, please provide their information as well.
  • The total amount that is owed to the creditor, including a detailed breakdown of any applicable charges that have been incurred since you initially received the debt.
  • A photocopy of the last billing statement the creditor sent to me before the debt was turned over to collections.
  • The outstanding balance when you received the debt, and the date you initially received the debt.
  • Proof that I owe the debt and that you have the legal right to collect on it. This could include the original contract from the creditor with a signature or any other documentation from the creditor that proves I owe the debt.
  • Proof that the debt is still within the statute of limitations and the method you use to make this determination.
  • A photocopy of the agreement
  • Proof that you are licensed to collect debt in my state of residence. Please provide a copy of your license or the name on the license, date it was issued, along with the applicable address and phone number that corresponds with the license. I also ask that you provide information on the agency that issued the license. And if not, why you feel that you can initiate debt collection efforts.

By providing me with this information, I’ll be able to make an informed decision regarding the outstanding debt and your claim that I’m liable and owe it.

I’m also interested in knowing how much you are willing to accept in exchange for settlement of the debt that you claim I owe. Please provide this information in writing when responding to this letter.

Thanks in advance for your prompt attention to this matter.

Sincerely,

(Name- refrain from typing your signature)

Sample Pay for Delete Letter

If you’ve been searching for ways to clean up your credit report, pay for delete letters may a tool you need in your arsenal.

Let’s say you submit an application for credit and are denied as a result of past credit missteps. This prompts you to review your credit report. And when you take a look, you notice a collection account that’s dragging down your credit score and making it nearly impossible to qualify for credit card or loan products. Bummer.

Or maybe you were aware a collection account exists on your credit report because debt collectors call your phone day and night. But you aren’t quite sure what the best course of action is to make the calls stop and fix your credit at the same time.

That’s where pay for delete letters come in. Not only can they get the debt collectors off your back, but there’s also a strong possibility that they’ll help revive your mangled credit score.

How Do Pay for Delete Letters Work?

Pay for delete letters are relatively straightforward. It’s a request to the lender on your behalf to delete the collection item from your credit report in exchange for payment. And it doesn’t have to be for the full amount owed. Most consumers offer a fraction of what’s owed and negotiate from there.

But shouldn’t you just pay the debt off to make it go away? Not necessarily. Collection accounts linger on your credit report for seven years from the original date of delinquency, so you have the option to wait until the fall off. However, you could be sued in the court of law and handed a judgment, which does even more damage to your credit score. As a result, most consumers will pay the balance in full or work out a settlement arrangement to avoid this fate.

The problem is paid collections don’t magically disappear from your credit report. Instead, they linger until the reporting timeline lapses and simply updated to a paid or settled collection. End result: little to no improvement to your credit score, which is probably one of the primary reasons why you took care of the debt in the first place. (Quick note: if you’re applying for a home loan, the lender will require that you pay off or settle any outstanding collections before they can approve your application. You should also know that some newer credit scoring models ignore small collection accounts and select paid collections altogether).

Are Pay for Delete Letters Effective?

There’s a lot of chatter about the effectiveness of pay for delete letters. Some swear by them and others dismiss them as a shady, unethical, and borderline illegal way to clean up your credit report.

Reasoning: credit bureaus are legally required to report accurate and timely information on your report. In turn, lenders and creditors must ensure that the data furnished to the credit bureaus accurately depict what’s going on with consumer accounts. But if you’re able to convince the collection agency to enter into a pay for delete agreement, the information presented on your credit report is no longer accurate and doesn’t tell the entire story about a particular debt.

Ultimately, it’s up to you to decide if you want to go this route. But pay for delete letters have worked for many who were willing to be persistent to go the extra mile to get the creditor or collection agency’s attention. And if you find that it works for you, be sure to only propose an amount that you can actually pay or you’ll burn the bridge. (And keep in mind that the debt collector probably won’t be open to payments).

Writing a Pay for Delete Letter

It doesn’t take a ton of effort to draft up a pay for delete letter. But before you get started, you want to peruse your credit report to ensure the collection account is showing up in multiple places.

If you find that this is the case, send dispute letters through the credit bureaus asking that the collection agencies prove that you actually owe the debt. Doing so will weed out those that have no claims to the debt and remove all the extra entries on your report. Once you’ve determined who actually has rights to collect on the outstanding balance, send a written request asking that they send a detailed breakdown of what you owe. (Important: never admit that you owe the debt).

Note the contact information as you’ll be using it to reach out. Also, come up with a number that you’re willing and able to pay to satisfy the debt. Once you’ve done so, draft up a letter asking that they delete the negative entry on your credit report in exchange for payment.

You should include the following components in your letter:

  • Your name and address
  • Debt collector’s name and address
  • Account number
  • Original creditor
  • Outstanding balance
  • Request that a goodwill removal be initiated without admitting that you owe the debt
  • The amount you’re willing to pay and by what method
  • Offer expiration date

Can you arrange a pay-for-delete agreement by phone?

You may be tempted to call, but refrain from doing so as you won’t have a paper trail. The debt collector can tell you anything on the phone, but what holds up in the event that they don’t fulfill their end of the bargain is written proof of the arrangement.

Sample Pay for Delete Letter

(Your Name)

(Your Address)

(Debt Collector’s Name)

(Debt Collector’s Address)

(Account Number)

(Balance)

(Original Creditor’s Name)

Dear (Debt Collector’s Name),

I recently reviewed my credit report and was made aware of a balance I allegedly owe for the account from (insert original creditor’s name) listed above.

I assume no ownership or responsibility for this debt, but I would like to propose a settlement offer if you agree to the following terms and conditions:

  • The amount paid will satisfy the outstanding debt obligation in full. This means that you cannot sell the debt to another party.
  • You agree to keep this arrangement confidential and not disclose any part of it to third parties.
  • Upon receipt of payment, your company will remove any entries or information related to this account in its entirety from my credit report. This should be done for each of the credit bureaus, including Equifax, Experian, TransUnion).
  • Once the account is deleted, you will not relist it as settled or paid in full.

If you’re willing to follow these terms and conditions, I will remit payment in the amount of (insert amount). Funds will be sent by (insert payment method; cashier’s check or money order preferred).

I’d like to reiterate that I am not assuming responsibility for this debt or promising to pay. I’m simply proposing a settlement offer that will only be executed if you agree to the terms and conditions listed above.

This offer is valid for (insert timeframe) days. If you’d like to move forward, please respond in writing on a company letterhead. The letter should also be signed by a member of upper-management that has the ability to uphold the terms and conditions of the agreement.

Thanks in advance for your prompt attention to this matter.

Sincerely,

(Your Name typewritten; do not insert your signature)

Sample Credit Inquiry Removal Letter

Credit inquiries won’t necessarily tank your credit score, but they can lower it by more than a few points if you’re not careful. But what about credit inquiries that you didn’t authorize? Keep reading to learn how to have them removed. You can also use our credit inquiry removal letter template to get started.

What is a credit inquiry removal letter?

A credit inquiry removal letter is used to alert the credit bureaus of an unauthorized inquiry and request that it be removed. Upon receipt, it is the credit bureaus duty to investigate your claim with the information provider and make a decision about whether it should remain or be deleted from your credit report.

While inquiries don’t have a major impact on your credit score, damage could result if too many appear in a short window of time. That’s why it’s important to have unauthorized inquiries removed as your report should only reflect what is accurate.

What are the different types of credit inquiries?

There are two types of inquiries that appear on your credit report.

Hard credit inquiries

Also known as voluntary credit inquiries, hard credit inquiries are generated when you submit an application for a debt product. This includes personal loans, student loans, auto loans, home loans, and credit cards.

They are classified as voluntary because they stem from actions take on your behalf to obtain credit. In essence, you’re granting lenders and creditors permission to review your credit profile to reach a lending decision.

Each time a hard credit inquiry appears on your credit report, your credit score will decrease between two and five points. However, an exception to the rule applies to what’s known as rate shopping.

In a nutshell, rate shopping allows you to apply with multiple lenders without sustaining too much damage to your credit score. The FICO scoring model will recognize that you are shopping for the most competitive loan product and will group all related hard inquiries generated in a 45-day window into a single credit inquiry.

This means you have the freedom to apply with various lenders when you’re searching for the best deal on an auto loan, home loan, personal loan, or student loan. And while this may seem a bit too tedious for you, it’s definitely worthwhile to do your homework until you find a low interest rate as a small increase could cost you hundreds or thousands more over the life of the loan.

Soft credit inquiries

Unlike hard credit inquiries, soft credit inquiries have no impact on your credit score. Why so? In some instances, they result from credit pulls that you did not authorize, which is more common than you may realize.

In fact, scores of creditors and lenders screen credit data to determine if consumers potentially qualify for their offerings. Those that seem to be a good fit will receive unsolicited correspondence by mail inviting the prospects to apply.

Your current creditors may also run soft credit checks to gauge how you’re managing your existing debt obligations. If there are signs of chronic mismanagement or financial trouble on the horizon, they may decrease your credit limit or close out your account altogether to minimize the risk of default on their account. On the contrary, current creditors could also like what they see and consequently increase your credit line or invite you to take advantage of a special promotion they’re offering.

You may also have soft credit inquiries on your report from a credit card or loan pre-approval. Select lenders and credit card providers afford you the opportunity to submit your information to determine if you have a strong chance of qualifying for their offerings with no impact to their credit score. This is a win-win for consumers as they can determine if a debt product is worth applying for without affecting their credit score.

How long do credit inquiries remain on your credit report?

Hard credit inquiries sit on your report for 24 months. However, they are only factored into the FICO scoring model for 12 months, which means your score will no longer be impacted after this time period.

What happens when you check your own credit?

Afraid to check your own credit? Don’t be. Credit checks you initiate count as soft inquiries and will not impact your credit score.

Writing credit inquiry removal letters

Have you reviewed your credit report and noticed hard inquiries that you did not authorize? The next step is to draft up a letter to have the items removed.

What to include

Before you sit down and start pecking away at your keyboard, be sure you have your credit report on hand. You’ll want to highlight or circle the inquiry in question. A photocopy of this report should be included with your letter. That way, the credit bureaus will know exactly which inquiry to investigate.

 

The next step is to draft up the letter using language that is concise and clearly conveys what you’re seeking. Be sure to include the following components in your letter:

  • Name, address, Social Security number, and date of birth
  • Today’s date
  • Reason for the dispute
  • Description of the inquiry (including the creditor’s name, date of the inquiry, and page number of where it appears in your credit report)
  • Request for prompt removal
  • The credit report or the confirmation number that includes the unauthorized inquiry

How to submit a credit inquiry dispute letter (where to send)

When your letter is received by the credit bureaus, they have 30 days to respond or the inquiry must be removed from your credit report. Below are your options to confirm your package lands in the right hands:

By mail

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

By phone

Equifax: 1-866-349-5191

Experian: disputes can only be filed by mail or online

TransUnion: 1-800-916-8800

Online

Equifax: http://www.equifax.com/personal/disputes

Experian: www.experian.com/acrdispute

TransUnion: https://dispute.transunion.com

*Quick note: You should also contact the lender or creditor that reported the inquiry to your credit report. Make them aware of your active dispute and kindly ask that they remove the credit inquiry from your report. They may be willing to do so before the letter even reaches their office, which expedites the process.

Sample credit inquiry removal letter

(Name)

(Address)

(City, State, Zip Code)

(Social Security Number)

(Date of Birth)

(Today’s Date)

(Credit Report Dispute Department)

(Credit Bureau Name)

(Street Address)

(City, State, Zip Code)

To whom it may concern,

The reason for this letter it to dispute an unauthorized inquiry on my credit report. On (insert date of report), I retrieved a copy of my credit report (insert credit report number) and discovered an inquiry that I have no knowledge of.

Because I did not apply for credit with (insert creditor or lender), I have also reached out asking that they remove the inquiry from my credit profile.

Please launch an investigation into (creditor’s name) inquiry to determine who authorized it. Upon completion, please provide written correspondence that details the results of your findings.

If you find that the inquiry is invalid, I am requesting that it be removed from my credit report as soon as possible. But if (creditor’s name) is able to prove that the inquiry is indeed valid, please provide written proof and a description of how the investigation was conducted.

Thanks in advance for your prompt attention to this matter.

Sincerely,

(insert signature here)

(Name)

What to do if my credit inquiry removal letter is ignored

You have the option to initiate another dispute or hire a professional credit repair company to do the legwork for you. If you’re leaning towards the latter, keep in mind that it’s only a worthwhile investment if you have other negative entries in your credit report that need to be addressed.

But if the questionable inquiry is older or isn’t making a big dent in your credit score, it may be worthwhile to just ignore it altogether and let time run its course until it falls off your report.

Sample Credit Dispute Letter

Are you desperately wanting to have those stubborn negative items removed from your credit report but don’t know where to start? Maybe they’re dragging your credit score down and you’re being rejected for credit cards or loan products at every turn. Or maybe you just want a peace of mind knowing that your credit score is no longer in the trenches. Either way, a credit dispute letter is an effective tool to get you moving in the right direction.

Read on to learn more about credit dispute letters, how they work, and what type of negative items they can be used for. You’ll also notice a handy template towards the end of the article if you’re stuck and don’t know where to start.

What is a credit dispute letter?

In a nutshell, a credit dispute letter is a mechanism that’s used to notify the credit bureaus of inaccurate or untimely information in your report. It also prompts the credit bureaus to launch a full-fledged investigation by contacting the information furnisher to determine if the item in question is indeed valid or should be removed.

From the time the credit bureaus receive your credit dispute letter and any supporting documentation, they have 30 days to complete their review and respond with a written outcome. Otherwise, the item must be removed from your credit report.

It’s important to file disputes to rectify inaccurate or untimely information on your credit report because negative entries that don’t belong could be dragging down your score. This could result in exorbitant interest rates, unfavorable credit terms, or being denied altogether. You could also miss out on that dream job, be denied occupancy for an apartment, or receive a higher insurance premium.

What type of information can be disputed?

According to the Fair Credit Reporting Act, “both the credit reporting company and the information provider (that is, the person, company, or organization that provides information about you to a credit reporting company) are responsible for correcting inaccurate or incomplete information in your report.”

Therefore, any entries in your report that contain errors, are past the reporting timeline, questionable, or do not tell the entire story is eligible for dispute. This could include but is not limited to:

  • Incorrect identifying information, such as your name, address, or Social Security number
  • Late payments that were actually paid on time
  • Collection accounts or public records that have passed the reporting timeline and should be removed
  • Erroneous accounts that you have no knowledge of and are on your report as a result of fraud
  • Duplicate entries listed for the same account or collection item
  • Errors in the account details, including the credit limit, monthly payment amount, or account status

But what about negative information that’s timely and accurate? While it technically doesn’t fall into the parameters of what’s eligible for dispute, you can always take your chances and hope that the creditor or collection agency doesn’t respond or can’t provide proof to validate the debt. If this happens, the credit bureaus will be forced to rule in your favor and remove the negative item. You also run the risk of having your dispute classified as frivolous and thrown out.

How to submit a credit dispute letter

Credit dispute letters are sent directly to the credit bureaus. However, it’s not a bad idea to notify the creditor, lender or information furnisher of your dispute once it’s been filed. And in some instances, it may be worthwhile to contact the creditor before you file the dispute to try and rectify the issue.

But if you’re already at the point where the credit dispute letter is drafted up and ready to go, along with any supporting documentation, here’s how to submit the entire package:

By Mail

This is the best way to submit your dispute letters to the credit bureaus. The instructions for submitting credit dispute letters by mail is as follows:

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

Be sure to only send copies, and not originals, just in case the package gets lost in the mail. And don’t forget to include photocopies of two forms of identification as it’s required by the credit bureaus to establish your identity.

Also, request that it be sent via certified mail with a return receipt so you’ll know exactly when the letter arrives at its intended destination.

By Phone

Do you prefer to speak with a customer service representative from the credit bureaus to file your dispute? They can be reached by phone at the numbers below:

Equifax: 1-866-349-5191

Experian: disputes can only be filed by mail or online

TransUnion: 1-800-916-8800

Word of caution: filing a dispute by phone does not afford you the opportunity to maintain a paper trail, which could be problematic. For starters, there’s no way to prove that the credit bureaus stayed within the 30-day timeframe when investigating your dispute as you have no way of knowing when the clock started. Furthermore, there may be a delay in the processing of your dispute because you’ll have to go through a separate channel to submit any supporting documentation that substantiates your claims.

Online

Filing credit disputes online are a convenient way to get the ball rolling. But unfortunately, there’s a major drawback to this approach. When you file a dispute online, you forfeit the right to re-dispute the item in question if the credit bureaus side with the information provider. So, it may be best to send in your credit dispute letter and supporting documentation by mail so you won’t lose your ability to submit a follow-up dispute if necessary.

If you would still like to file a dispute online, the credit bureau’s dispute websites are listed below:

Equifax: http://www.equifax.com/personal/disputes

Experian: www.experian.com/acrdispute

TransUnion: https://dispute.transunion.com

Writing credit dispute letters

What to include

When drafting up your credit dispute letter, be sure to include the following:

  • Your name, address, Social Security number, and date of birth
  • Date the letter was drafted
  • Reason for the dispute
  • Account name and number
  • Request that the incorrect or untimely information be removed or updated
  • The corresponding credit report or confirmation number

Some important tips

  • Always use language that’s clear and professional. While credit bureaus are mandated by federal law to investigate and respond to all disputes within a 30-day window, they also reserve the right to deem your dispute as frivolous and toss it out.
  • The more supporting documentation, the better. You want to make it as easy as possible for the credit bureaus to rule in your favor. And it never hurts to provide more than enough evidence to plead your case.

Sample Credit Dispute Letter

(Your Name)

(Your Address)

(Your City, State, Zip Code)

(Social Security number

(Date of Birth)

(Date)

Credit Report Dispute Department)

(Credit Bureau)

(Street Address)

(City, State, Zip Code)

To whom it may concern,

The reason for this letter is to dispute an item on my credit report. Attached is a copy of my credit report (insert credit report or confirmation number) with the item in question (circled/highlighted).

This item, (insert the name of the item, type, and any other applicable information like the account number) is (inaccurate, untimely, incomplete) because (insert your reasoning).

As a result, I am requesting that the item be (removed, updated, or any other applicable action).

I have also enclosed a copy of [describe any supporting documentation that you’ve enclosed]. Please investigate my dispute and rectify the issue as soon as possible. Thanks in advance for your prompt attention to this matter.

Sincerely,

(insert signature here)

(Your Name)

What to Do If My Credit Dispute Letter Is Ignored

If 30 days or more have lapsed and you still haven’t received a response, don’t be alarmed. Creditors don’t always answer right away, and when they do, chances are they will try to drag the process out by requesting even more documentation or something along those lines.

The smartest move is to give them what they what. But if you’ve already gone above and beyond to do your part, you’ll want to file another dispute using a new letter to plead your case once again. Be sure to include notes or documents that are related to any correspondence you’ve had with the creditor.

A thorough dispute letter with adequate documentation will usually get the results you’re looking for. However, it may be necessary to step it up a notch by seeking legal counsel or hiring a credit repair professional to turn up the heat on the creditor or credit bureaus.

The Bottom Line

Credit dispute letters are an effective way to clean up your credit report. But if you don’t feel comfortable drafting up letters on your own, you can always solicit the assistance of a reputable credit repair company to do the legwork for you.

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.

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.

How to Remove a Judgment from Your Credit Report

If a debt collector files a lawsuit against you for the amount owed and you ignore the lawsuit or fail to give a timely response, they may be awarded a judgment by the judge, notes the Consumer Financial Protection Bureau (CFPB).

When this happens, your credit could sustain major damage. Even worse, you could sustain severe financial damage should the debt collector be given the right to garnish the funds in your bank account or your wages (through a wage attachment). And in some cases, they could even go as far as putting a lien on your home, the CFPB adds.

You can avoid judgments by working with the debt collector prior to or at the first sign of a lawsuit. But if it’s too late and the judgment has already made it to your credit report. There are ways to have it removed.

Read on to learn more about the different types of judgments and the impact they have on your credit report and score. You’ll also learn how to have them removed from your credit report. And we’ll wrap up with a discussion on ways to rebuild your credit score after the fact.

How are judgments classified?

There are four types of judgments you should be aware of.

Satisfied judgment

This label is given to judgments that have been paid in full or settled. While a satisfied judgment doesn’t necessarily mean your credit score won’t suffer, it still looks much more favorable in the eyes of potential lenders and creditors than an unsatisfied judgment. However, it still remains on your credit report for seven years from the date of filing.

Unsatisfied (or unpaid) judgment

If a judgment that has not been paid in full or settled, it is classified as an unsatisfied (or unpaid) judgment. Not only do unsatisfied judgments spell trouble for your credit score, but they could also have harsh consequences for your finances. Why so? The creditor that you owe may employ tactics to recover what they’re owed. And although it remains on your credit report for seven years from the date of filing, you may notice that it stays longer if it is ref-filed by the court.

Re-filed judgment

These are judgments that have been renewed through the courts because it was not paid in full or settled. To prevent judgments from being re-filed on your credit report, it’s best to work with the creditor who sued you to reach a settlement agreement. And if you have the funds available, you also have the option to pay in full so it can be converted to a satisfied judgment and not continue to haunt you.

An important note: be sure to confirm that you’re remitting payment to the correct creditor if the account has been tossed around to different collection agencies. Otherwise, your payment will be in vain.

Vacated judgment

Vacated judgments are classified as such if they are dismissed or thrown out by the courts due to a successful appeal. They should automatically be removed from your credit report. But if this is not the case, you should file a dispute with each of the credit bureaus to have it removed. Just be sure to provide adequate documentation to prove that the judgment is, in fact, vacated by the courts.

How do judgments impact your credit score?

Judgments will plummet your credit score, but the impact will lessen over time. (The exception to this rule applies if the judgment is re-filed by the courts). But beyond your credit score tanking, there are several other negative consequences that can result from a judgment being filed, including:

  • Less favorable approval odds for credit and loan products
  • Exorbitant interest rates on credit and loan products
  • Higher deposit requirements for rentals and services

Why so? Well, lenders will perceive you as a risky borrower with an elevated chance of default. In turn, they may require that you spend more in interest in fees to access their products. Or they could deny your application altogether.

How long will a judgment remain on your credit report?

Unlike most negative accounts, like collections, charge-offs, and repossessions, judgments are not reported to the credit bureaus by the court. Instead, the credit bureaus acquire this information for reporting through public records.

Once it’s included on your credit report, the judgment will remain for seven years from the initial date of filing. And should you decide not to start repayment or ignore the judgment altogether, it can be re-filed by the court and remain on your credit report for an additional seven years (or indefinitely if you refuse to address it and it continues to get renewed by the courts).

But what if you satisfy the judgment or pay it in full? Unfortunately, it will still remain on your credit report for seven years from the initial filing date.

However, judgments that are vacated by the courts are deleted by credit bureaus. As a result, they will be removed from your credit report, but you may have to provide adequate documentation with your dispute to ensure the deletion is done in a timely manner.

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

Contact the court

It won’t be enough to file a dispute with the credit bureaus asking that they validate the debt or remove it if they’re unable to do so. Why so? It’s not their responsibility to reach out to the court to affirm or deny the judgment.

That falls on you, and if the court fails to respond, you can then plead your case to the credit bureaus to have it removed. But you’ll need to provide proof of your attempts to contact the court with your dispute to have the best chance of the credit bureaus ruling in your favor and removing the negative entry.

An important note: be sure to dispute the judgment with all three credit bureaus. Having the entry removed from one credit report doesn’t mean that other two bureaus will follow suit as they do not communicate.

Dispute inaccuracies

Did you find inaccuracies in the credit report listing? If so, you can file a formal dispute with the credit bureaus to address the issue. Per the Fair Credit Reporting Act, they are required to update the entry with the correct information.

But keep in mind that the credit bureaus will expect you to reach out to the courts and obtain documentation to support your claims. There’s always a chance that they won’t bother to address the issues and simply delete the judgment.

File an appeal (to have the judgment vacated)

It’s worth a shot to file a motion to appeal your case (or vacate a judgment) with the court in hopes of having it dismissed.

The judge may agree to vacate the judgment if both parties can agree on a settlement amount. You may also be in luck if you were unable to attend the original hearing for a valid reason, did not receive a summons to attend court, or the debt collector broke the law.

If the judge rules in your favor, the judgment will be vacated and removed from your credit report (though you may have to provide the credit bureaus with documentation to expedite the process). Even better, you’ll be off the hook for the debt balance and accompanying legal fees.

Seek professional help

Dealing with judgments on your credit report can be overwhelming. However, there are several reputable credit repair companies that can lend a helping hand to have them removed from your credit report. And if the judgment has been vacated by the reports, it shouldn’t take long for the credit repair company to get the desired result from the credit bureaus.

Quick note: it may be worthwhile to have the judgment removed if you’re trying to get approved for a particular debt product, like a mortgage. But it doesn’t erase your obligation to repay the debt. And the court may proceed to re-file the judgment if the amount owed remains over an extended period of time.

Tips to help rebuild your credit after a judgment

It’s no secret that a judgment on your credit report limits your credit card and loan options. The good news is you don’t have to wait the entire seven years until it falls off your credit report to start rebuilding your credit rating. Here are some actions you can take right away to give your score a boost:

Get current on all your debt obligations.

Are there any past due accounts lingering on your credit report? Make a plan to get current right away or work with the creditor to break up the payments. Not only does payment history account for 35 percent of your credit score, but the last thing you need when trying to rebuild your credit score is another account going into collections.

Continue to make timely payments.

The more positive payment history reported to the credit bureaus, the better. So, you want to maintain this practice while getting back on track. And in the event you encounter financial difficulty, contact creditors right away to come up with a plan of action. It’s much better to be proactive than reactive when dealing with creditors, and you’ll give yourself the best possible chance of having them work with you to find a resolution until you get your finances in order.

Reduce your debt load.

Refrain from applying for and opening new credit accounts.

Each time you apply for new credit, a hard inquiry is generated and your score drops by two to five points, and credit inquiries remain on your credit report for two years. This may not seem like a huge drop, but could quickly add up if you apply for several credit cards at once. The exceptions to the rule are secured credit cards and credit builder loans, which are geared towards consumers with less than perfect credit. More on the that shortly.

Open a secured credit card

Secured credit cards are another option you can use to rebuild your credit after a judgment. When you apply, prepare to fork over a deposit equal to the credit line to open the account. The creditor will then holds the funds in a savings accounts until you close the account or it is converted to an unsecured credit card.

Apply for a credit builder loan through Self Lender

Prefer not to make a hefty deposit to open a secured credit card? Apply for a credit builder loan from Self Lender to keep more of your hard-earned cash in your pocket. Unlike traditional credit builder loans, they only require that you pay a small administrative fee to open the account. Then, you will remit a small payment each month until the loan is paid in full. Each payment will be reported to the credit bureaus to reflect positive payment history.

The bottom line

You can play an instrumental role in the removal of your judgment if you’re persistent and take the right actions. Even better, your credit score will bounce back. And you will have a peace of mind now that a tarnished credit rating isn’t hanging over your head.

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 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.