Credit Report and Credit Score Analysis - Page 8

10. Correcting derogatory information on the credit report

Cleaning up derogatory items from your credit report is a four step process.  You can either do all the clean up work yourself or you can hire credit cleanup specialists to do this work for you.  Keep in mind however that even folks in the credit repair business need you to get the letters of satisfaction from your lenders showing that the derogatory items has been corrected and/or the outstanding balances have  been paid in full.  

Step 1:  The first thing step as we mentioned earlier is to get in touch with the lender or collection company and try and settle the amount that you owe to them.  Remember if you decide to settle for a smaller amount than the total amount owned to them, they will mark the account as a settlement rather than a fully paid account and it will still show up as a derogatory item against your bureau for seven years.  In fact if a couple of years have gone by and the amount is large and you don’t think that you will be able to pay the entire amount off, we recommend that you let it be!  The reason is that the minute you settle and send in a partial payment the account status will be changed to settlement in lieu of full payment and it will come up as a new derogatory item that will stay on for another seven years!

Step 2:  Once a settlement is reached between you and the lender make sure you follow through and send in the payment that is due to them; send all payments by certified mail, or courier service.  You may even want to wire the money into the lender.

Step 3:  Make sure that the lender sends you a letter of satisfaction that denotes that the account has been duly paid off or settled as the case may be.  This letter of satisfaction is very important since without this proof there credit repositories will not be able to amend their databases.

Step 4:  Send a cover letter to each of the repositories requesting that the derogatory items be removed and include the satisfaction letter to provide the proof that they will need.  The repositories have 30 days within which they have to make their inquiries and update their credit reports.  If the item has been corrected by them they also have to provide you with a free copy of an updated credit report without the derogatory item listed against you.  Many times the repositories may also try to sell you a credit monitoring alert service – we personally think it is not such a bad idea to monitor your credit on an ongoing basis.

<  Previous  1  2  3  4  5  6  7  8  9  Next  >