Information on getting delinquent accounts off credit reports

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READER QUESTION

What is the fastest way to get a report of collection and late payments off a credit report?

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Bills.com Resident Expert
Feb 02, 2012
HIGHLIGHTS
  • Understand that accurate information can't be removed from your credit report.
  • Review the procedures for disputing inaccurate information from your credit report.
  • Take the right steps to improve your credit.
BILL'S ANSWER

There is no reliable way to remove accurate credit information from a credit report. Despite the claims of many organizations offering “credit repair,” a listing that represents your payment history accurately to a creditor will probably stay on your credit report for seven years from the date of charge off, which is when most derogatory items are removed from your credit report, with the exception of bankruptcies and certain other items which can stay on your credit report for ten years. If you have an account on your credit profile which is reporting as delinquent or in collections, you may not be able to remove the account from your credit report, but you should at least be able to mitigate the negative impact of the derogatory listing on your credit score.

First, you may want to pay off any delinquent accounts which are appearing on your credit report. You will likely have difficulty clearing up your credit rating if you leave old collection accounts unpaid and unresolved. You do not necessarily need to pay the full balance of the debt; many creditors will accept a settlement of significantly less than the full balance owed on delinquent accounts in order to resolve the debt. If you contact your creditors, or the collection agencies representing them, you may be able to negotiate settlements for 50% or less of the current balance owed. You may also wish to contact a professional debt negotiation firm for assistance in resolving your delinquent accounts; for more information on the options available to you in resolving these old debts, I encourage you to visit the Bills.com Debt Help page. Also, if you enter your contact information in the Bills.com Savings Center, we can put you in contact with a pre-screened debt resolution firm which may be able to assist you in paying off your delinquent accounts.

In addition, if you have any questionable items on your credit report which you think are reporting inaccurately, disputing the items is the first step in having them removed from your report. Generally speaking, I encourage consumers to carefully review their credit reports from each of the three major credit reporting bureaus (Equifax, Experian, and TransUnion) at least once per year to make sure that all of the information appearing on the reports is accurate. A free copy of your credit report can be obtained at AnnualCreditReport.com. Credit reports are notoriously inaccurate, and close scrutiny is required on your part to make sure that your credit report is current and accurate. See the Federal Trade Commission document FTC Facts for Consumers: How to Dispute Credit Report Errors for more information.

Since it is somewhat unlikely that you will be able to have accurate credit information removed from your credit reports, you may want to focus instead on how you can improve your credit rating going forward. The first step to rebuilding your credit rating is to establish new positive trade lines to counterbalance the negative impact of these old delinquent accounts. As mentioned above, you also need to carefully review your credit reports on a regular basis to make sure that all information appearing on your reports is accurate and up to date. You also need to avoid overusing credit, as having too much debt can negatively influence your credit score; a good rule to follow is to carry balances equaling no more than 25% of your total available credit lines. To learn more about credit, credit reports, and credit scoring, I encourage you to visit the Bills.com Credit Help page.

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

Best,

Bill

Bills.com

Comments (85)


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Jeremy B.
Wescosville, PA  |  February 02, 2012
I have a question about my account that is in collections. It's been almost a year since I closed the account but never made the final payment. I want to know how it will affect my credit rating if I never pay the account. And should I settle the account or pay in full with the collection agency.
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Bills.com
February 03, 2012
Your obligation to pay did not end because you closed your account. Your account continuted to be reported to the credit agencies. If you stop paying, then your account with show as late, moving from 30-days late, 60-days late, etc., until the account goes into charge-off status. All of this harms your credit score significantly.

You ask if you should settle or pay in full. Is someone offering you a settlement? What you should do in part depends on what size settlement you can reach and if you can afford to meet the settlement terms, whether you can negotiate a pay for delete, and what ability the creditor has to come after your income or assets.
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Jan K.
B/o S Plainfield, NJ  |  January 25, 2012
As I am going through a divorce, and wanted to refinance my home but was told it wasn't a good time because my credit score was 650. I was shocked and ran my credit and found adverse accounts that I didn't incur. I opened investigations and it came back that they were disputed, rule in my favor and closed and were being removed from my credit score (in all three credit score services). I reran my credit report and did in fact see that they are 100% removed. Will my score now increase?? I have little debt and everything is paid on time (usually a week early) and above the minimum due (I have one and only one credit card with roughly $8K).
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Bills.com
January 25, 2012
Your score will increase. How much it jumps depends on how nasty the derogatories were, their age, and how many. Your credit mix and the age of your positive accounts matters. If you only have one account that isn't very old, your score may be middling. Also, the amount of credit utilization matters. Try to keep it below the 30% rate. And, remember to always pay on time. If your credit score is low, you can look into a FHA loan.
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Patricia R.
January 04, 2012
fastest way possible. I have the money now, should I pay all 14 bills off immediatley paying each in one lump sum? Or should I set up a 6 month payment plan with each collector and pay them all within 6 months. Which way would make my credit better, fastest?
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Bills.com
January 04, 2012
Are all 14 accounts delinquent? If yes, pay them all now. Are some delinquent? Pay the delinquent accounts now, and continue to make on-time payments on the current accounts. Are none of the accounts delinquent? If they are all current, then make more than the minimum payments over six months or so.
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Patricia R.
January 05, 2012
I dont know why my question wasn't fully posted. Yes, all 14 bills/accounts are delinquent and they are all medical bills totaling about $4,000. I was told that paying them all off now would not improve my credit at all. Is that true?
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Bills.com
January 05, 2012
Short answer? Paying the debts all at once or over time will not help your credit score.

Longer answer? Credit scoring software dings a person's score when an account becomes delinquent. It does not not reverse the damage when a delinquent account is paid. The elements that raise a credit score are consistent payments, low credit utilization, a long credit history, a diverse array of account types, and other minor factors.
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Patrick A.
Ft Lauderdale, FL  |  January 12, 2012
Negotiate with the accounts that you will pay in full as long as they remove the delinquency off of your credit report, most places will do this but make sure you have it in writing. Then pay of the accounts and after they remove the delinquency your credit score will go up. Also don't let them say they can't do this as they can remove information off of the account. Good luck
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Mo N.
New York, NY  |  January 03, 2012
Hello. I bought some luggage at macys in early november and then went out of the country two times. Each time I was away I failed to see the bill from macys. They say they cld report it as 60 days past due but they are only reported it as 30 days overdue. I paid the full bill with late fees as soon as it came to my attention on Sunday before I learned about pay for delete. Although yesterday a Macys rep told me the derogatory comments could probably be removed as soon as the payment posted, a different rep and his supervisor claimed they could not remove the delinquency because the law requires reporting of accurate info. I called back later to complain about discrepancies between the reps, ask for a cite to the law that prevents them from deleting the delinquency, and plead that they consider my otherwise ie perfect record. It didn't work. at the end I said I may close the account bc I have a bad taste and I so rarely use it anyways. The rep asked if I was ready to do that right now. I balked because I needed to ressearch if closing the account would further hurt my score. He reminded me that my macys card is linked to a macys ame (that I never use and somehow got sold when I wasn't paying attention or understanding). In any event, I would like to call back and close because I don't appreciate their unwillingness to work with a good customer who has never been a day delinquent. Is there a chance that might inspire a change in their policy? If I have to put up or shut up, would closing the two cards hurt me even more than I am already hurt? Is there anything else I can try? I have no other delinquencies anywhere on my record and had a near perfect fico score before this.
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Bills.com
January 04, 2012
Since you rarely use the cards, I assume that they constitute a very small percentage of your debt activity. Read the Bills.com article about FICO score basics to learn about the basic factors in the credit score, and how to improve your score. Since payment history is the major factor and you pay all your other bills on time, the one delinquency will negatively impact your FICO score, but your score could very well remain in the excellent range.

Consider your credit mix and your credit utilization ratio. If you are maxed out on other cards, and the Macy cards leave you with large unused credit, then this would be a reason not to cancel the cards. If closing your cards will bring the total number of active tradelines below three, your FICO score will suffer. The length of your credit history also affects your FICO score. If you have had the Macy's accounts for a long period of time, closing them can lower your score. If there is no annual fee, you could choose to pay them off and leave them open.

If you decide to close the cards, I recommend that, after canceling them, you monitor your credit report, to see what the exact effects are. If your score is damaged, take the proper steps to improve your score.
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Shawn S.
Oregon, OH  |  January 03, 2012
I have an account that went over due. I was finally able to pay the account in full. This was almost 3 months ago and it still shows that I still owe the money. I have disputed a few times and nothing has happened. I have called the creditor and keep getting passed to another voice mail. i call the credit report agencies and they told me to dipute it again. What next
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Bills.com
January 03, 2012
The dirty secret at credit reporting agencies is that despite their systems being automated, it can still take up to three months for a derogatory or positive event to appear on a consumer's credit report. You are nearing that threshold. If at the three-month mark the account is not updated, then dispute the derogatory entry on your credit report.
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Sumaira A.
Fremont, CA  |  December 14, 2011
I fell behind On my Macy's account by two payments and was reported to the credit bureau as delinquent. But I made my payment in full before the third due date and account status was reverted to current. How does this affect my credit score?
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Bills.com
December 14, 2011
Macy's has two options, both within the law, to report this delinquency. It could leave your account status alone as "current" or as a slow pay for two months. Go to AnnualCreditReport.com to receive a no-cost, no-gimmick, no-nonsense copy of your credit report. There are three credit reporting agencies, which are commonly called "credit bureaus." Wait until next month, and order a report from one credit reporting agency to see how Macy's reported the account status. Then wait a month and order another report from a second credit reporting agency. Then wait another month and order a report from the third. You will have your answer by the third month.

Why not order all three at once? One of the dirty secrets in the consumer credit reporting business is that credit card issuers like Macy's do not always update customer account information to the credit reporting agencies in a timely manner, and the credit reporting agencies do not always publish the latest information available. By spreading out your inquiries over three months, you can see what is reported and when.
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Brian P.
Crystal Lake, IL  |  November 15, 2011
I just received notice that a delinquent payment has been reported to the credit bureaus. As soon as I realized the bill hadn't been paid I made the payment. I have called to dispute the late pay. If they do not find wrong doing on their part and refuse to remove it, how long can I expect it to take for my credit to start significantly repair itself? My credit is clean (otherwise), I am very careful about this and need to buy a car in the spring.
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Bills.com
November 15, 2011
How your score will be affected depends on the number of other accounts you have in good standing, your credit utilization on those accounts, the length of your credit history on your accounts, and the variety of accounts on your report. There is no exact way to tell how your score will be affected and how quickly you can get it back to its previous level. I suggest you view your score now and see how it's changing from month to month, as it may make sense to delay your car purchase a month or two, if doing so will allow you a better interest rate.
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Adam G.
Boynton Beach, FL  |  October 27, 2011
I had a student loan that first became delinquent in 11/04. It went on to collection status and the loan was paid in full in 2008. All 3 credit bureaus listed the loan as "paid as agreed." Experian and Transunion both removed the trade line from my reports this month since it's been 7 years from date of first delinquency. Equifax on the other hand is stating that since the account shows as "paid as agreed," the trade line will remain on my credit report for 10 years. Will I have to wait 3 more years of having this negative information on my credit reports?
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Bills.com
October 28, 2011
Equifax's explanation mystifies me, and I cannot explain it. The FCRA is clear on the subject of how long a derogatory account can appear on a credit report. Bankruptcies and judgments can appear for 10 years, but not a run-of-the-mill late payment or account settled as agreed. Consult with a lawyer who has consumer law experience to learn if you have a cause of action against Equifax for failing to comply with the FCRA.
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