Can you wipe away credit stains?
A mother wanted to know whether there was any way her daughter could get rid of some bad blemishes on her credit report.
Would creditors remove such items, she wondered?
This mother is certainly not alone in her worries. But we're not talking about negotiating your way to a better grade school report card.
Many younger consumers are trying to figure out how to clean up their credit — particularly if they want to jump into the market for bargain-priced homes and super-low mortgage rates. “It's a really serious problem in economic hard times like this,” said Susan Grant, director of consumer protection for the Consumer Federation of America.
Are there ways to get those bad marks removed?
“No guaranteed ways, but there are ways,” suggested Gerri Detweiler, director of consumer education for Credit.com.
Detweiler said that in some limited cases it can work to try to negotiate on your own behalf with creditors to get items removed.
“It's a negotiation like anything else. You may or may not get it,” Detweiler said. “You're really trying to ask them to do you a favor here.”
Favor is the operative word. If an item on a report is accurate, generally, you're out of luck.
Where might a consumer have some negotiating room?
Perhaps, Detweiler said, if a consumer has an overall good report but missed a bill during a vacation or lost a bill during a move to a new home.
Detweiler said a creditor would be more likely to remove a single late payment that appears to be an isolated incident.
But a consumer might have to make repeated requests — including emails, faxes and phone calls — before getting such an adjustment.
What if you want to barter with a collection agency?
Detweiler said it's worth trying.
“You have to get it in writing,” she said. “If you don't get it in writing, you don't have an agreement.”
Don't bet on this strategy working, though, according to other credit experts.
More often, you're going to be out of luck if you offer to pay a collector and demand that an item be removed from a credit report in exchange for your money. Credit-reporting agencies, such as Experian, frown on this approach.
Sure, plenty of consumers try to make a deal, particularly if a negative entry is standing in the way of buying a car or refinancing a mortgage, said James Angelo, president of J.J. Marshall & Associates, a collection agency in Shelby Township, Mich.
But he said it doesn't work. It's an issue of fairness — and integrity of reporting.
“How fair is it to the guy who pays his debts?” Angelo asked.
A paid collections account would be reported as paid but not deleted from a credit report.
In some cases, he said, it's possible to get an item removed — say, if it's a medical billing mistake or a bill that an insurer is handling.
Consumers, of course, need to steer clear of costly gimmicks.
The Federal Trade Commission late last month took action involving a credit repair CD titled “Credit Solutions.”
The FTC is mailing 831 checks of $13.70 each to consumers who allegedly were charged an illegal advance fee for that CD, which had information on how to repair your credit.
Warning signs of a scam include a guarantee to erase bad credit, claims that you can create a credit identity, and requiring money up front to repair your credit.
As some people have returned to work, there is more focus on paying off bills and rebuilding credit, said Kathryn Moore, financial counselor for GreenPath Debt Solutions, a nationwide, nonprofit financial counseling group based in Farmington Hills, Mich.
“If you owe the debt, the best thing to do is figure out a plan to pay it back,” she said.
Typically, most accurate items, including late payments, can remain on a credit report for seven years and bankruptcy information can remain for 10 years.
John Ulzheimer, president of consumer education at SmartCredit.com, said consumers can dispute wrong items with lenders and collection agencies, too.
By law, a lender and collection agency is required to perform a reasonable investigation.
But disputing an item does not mean that you're necessarily going to have it removed from a credit report.
“If the item is correct, then contacting the lender isn't going to lead to a removal,” Ulzheimer said.