Removing Negative Items from Your Credit Report

Reader Question: "I have heard people say it's possible to remove negative items from a credit report, but then I've seen other websites say that it's not possible. I'm confused, to say the least. Is it really possible to remove negative information from a credit report, and if so how do I get started?"

The reason you've seen so much conflicting information is because many people don't know what they are talking about. But this doesn't stop them from posting information online, or claiming to be an "expert" on the subject.

Once you know the facts about the reporting industry, it's really not confusing at all. It's mostly black and white, with very few gray area. Here is what you need to know about removing negative items from a credit report file:

Negative information can show up on your credit in several ways. It might be a history of late payments, a debt collection, a bankruptcy, etc. But all of these items can be classified in one of two ways -- they are either legitimate entries, or they are mistakes. This is an important distinction, because it determines whether or not you can remove a negative item from your credit report history. Let's talk about what you can (or cannot) do for each type of entry:

Negative information that is legitimate can remain on your credit report for up to seven years, or up to ten years for bankruptcy filings. Even if you pay off an old account that was reported as unpaid, it won't remove the initial posting from your report. It will change the account status to "paid," but that's it.

Negative information that is posted in error can be disputed. You can dispute such errors directly through the credit-reporting agency's website (Equifax.com, Experian.com or TransUnion.com). These companies are required by law* to investigate the disputed item. If they find that you are correct, or if they do not have enough evidence to support a finding, they must remove the negative item from your credit report file.

* Here is what the Fair Credit Reporting Act has to say about the dispute process. This is the federal law that regulates the reporting industry:

If the accuracy of any item of information contained in a consumer's file ... is disputed by the consumer, and the consumer notifies the agency directly ... the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file.

In other words, they must investigate the disputed item in a timely fashion, and if their findings support your claim the negative information will be removed from your report entirely. They must delete the erroneous item within 30 days from the time you first dispute it.

This quote comes from section 611 of the Fair Credit Reporting Act (FCRA). This section is entitled "Procedure in case of disputed accuracy." It goes into a lot more detail about the dispute process, how and when a negative item should be removed, etc. So if you want to learn more about this subject, I recommend reading this section. You can find the full text of the FCRA on the FTC's website.