Credit Report Repair

My bank canceled my card due to inactivity and reported it 'closed by consumer.' Can I have that removed from my credit report?

Two questions: If a credit card company closes out your credit card because of not using it and reports it and it shows on the credit reports that it was closed by the consumer can we have that removed? We did not close it they did. My other question is if you sell your home on a short sale and the bank approved and accepted the lower amount (the home was not in foreclosure) can that be negative on the credit reports?

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Bill's Answer
(4 Votes) Team


Accurate derogatory information may appear on a credit report for 7½ years. Accurate positive information can appear on a credit report indefinitely. Here, the closing of an account is neither positive nor negative. In fact, the credit card issuer did you a favor by reporting that you closed the account. This report will appear far more positive to future potential creditors than if it would have been reported that it closed the account.

Consider leaving this entry as-is. If you demand that the entry be corrected, it will appear as a negative. Your positive history on the account in question will be a net-plus in your history, but may be depressed slightly by the account's closure. If you choose to correct the error, I outline the process for doing so below.

Short Sale and Credit Report readers have reported that short sales have either no or a slightly negative impact on the consumer's credit score. This is in contrast to a foreclosure, which will have a significant impact on a credit score. If you are facing foreclosure and are given the option of a short sale, do it! The slight impact a short sale may have on a credit score is no reason to avoid a short sale.

Credit Report Inaccuracies

The information contained in a credit report is an imperfect snapshot of a consumer's financial life from 60 to 90 days ago. In fact, credit reports are notoriously inaccurate. The General Accounting Office reports that of the 52 million free credit reports requested of the credit reporting agencies (commonly called "credit bureaus") through, 25% of those reports resulted in a dispute. Of those disputes, only 25% were verified as accurate. According to a 2004 Federal Reserve Board report, 79 percent of credit reports may contain some type of error and that about 25 percent of all consumer credit reports may contain errors that can result in the denial of access to credit.

The Fair Credit Reporting Act (FCRA), a federal law, requires consumer credit reporting companies to report accurate information. If you find any inaccurate information in your credit report, you should dispute the credit report listing with the bureau in question.

Seven-year rule

Before we discuss how to resolve errors in credit reports, let me address what may be several faulty assumptions in your question. You wrote, "So because they are closed (I can request them be removed)..." That is incorrect. Closing an account does not cause it to be removed from your credit report. In fact, if an account has positive history and is closed, it may never be removed from your credit history. The only accounts that will be removed from your credit history are those with a default.

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. Under FCRA §605 (a) and (b), an account in collection will appear on a consumer's credit report for 7.5 years. The clock starts approximately 180 days after the date of first delinquency on the account. To learn when an account will be removed by the credit reporting agencies (TransUnion, Equifax, and Experian and others), add 7.5 years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to the seven-year rule. However, if the debt is a tax lien, that can appear for seven years from the date of payment. A bankruptcy will appear for ten years from the date of the final order. Delinquent federal student loans can be reported indefinitely, i.e., for as long as they are delinquent.

Regarding the second part of your question, "...when disputing the items should I dispute them in the same letter?" the answer is to dispute each item separately. Under the FCRA, the consumer credit reporting companies are allowed to refuse to investigate any challenges that they consider frivolous. A factor used to gauge if a challenge is frivolous is if a consumer challenges too many things at one time. Limiting the number of items challenged will avoid the challenges labeled as frivolous.

Therefore, the smartest strategy is to take your time and dispute one item at a time. Trying to dispute four items at once may be counterproductive.

Steps to dispute credit report

The Federal Trade Commission lists the following steps as the appropriate method for resolving credit reporting inaccuracies:

Step 1: Get Your Credit Report

An amendment to the FCRA requires each of the nationwide consumer reporting companies -- Equifax, Experian, and TransUnion -- to provide you with a free copy of your credit report, at your request, once every 12 months.

The three nationwide consumer reporting companies have set up a Web site, toll-free telephone number, and mailing address through which you can order your free annual report. To order, visit, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print this form. Do not contact the three nationwide consumer reporting companies individually.

You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order from only one or two. The law allows you to order one free copy from each of the nationwide consumer reporting companies every 12 months.

You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide consumer reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.

Step 2: Look for Errors

Review the report and compare the information it contains to information you know to be accurate. In particular, make sure the report contains your accurate:

  • Name
  • Social Security number
  • Address and previous addresses
  • Accounts and account numbers

If any of the above information is inaccurate, the consumer credit reporting company may have added incorrect information to your account accidentally. This is very common. Alternatively, someone may be using your identity.

Under the FCRA, both the consumer reporting agency (i.e., Experian, Equifax, or TransUnion) and the information provider (i.e., the person, company, or organization that provides information about you to a consumer reporting agency) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting agency and the information provider.

Step 3: Correct the Errors

Tell the consumer reporting agency, in writing what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Send your letter by certified mail, "return receipt requested," so you can document what the consumer reporting agency received. Keep copies of your dispute letter and enclosures.

Consumer reporting agencies must investigate the items in question -- usually within 30 days -- unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information.

After the information provider receives notice of a dispute from the consumer reporting agency, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

When the investigation is complete, the consumer reporting agency must give you the results in writing and a free copy of your report if the dispute results in a change. This free report does not count as your annual free report. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

If you ask, the consumer reporting agency must send notices of any corrections to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation doesn't resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting agency to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

Step 4: Dispute the Errors

Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct -- that is, if the information is found to be inaccurate -- the information provider may not report it again.

To obtain a sample of a dispute letter please visit the Debt Self-Help Center.

The three major consumer reporting agencies also offer consumers the ability to dispute a credit listing online:

I hope this information helps you Find. Learn & Save.




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