A year ago you went 45 days past due on a few of your bills when you lost your job. Luckily, you were able to find a new position quickly and catch up on the amounts you owed. Now you’re ready to apply for a mortgage, but when you check your credit report — yikes! Those negative items stand out like klieg lights, beacons attracting the wrong kind of attention you want from a mortgage lender.
So you do what every Internet savvy person does: You Google “how to remove negative items from credit report fast.” After a few minutes of scanning consumer finance blogs and websites, you breathe a sigh of relief. All it will take is a campaign of “goodwill letters” to the creditors who’ve stamped your accounts with black marks. Surely they’ll take mercy on you once you explain why you were late paying them and delete that information…after all, other people with credit issues have had luck with this tactic. Why shouldn’t you?
Unfortunately, a goodwill letter writing campaign to erase accurate negative information from a credit report falls into the don’t-believe-everything-you-read-on-the-Internet lesson book. Here’s why:
Lenders must abide by the Fair Credit Reporting Act (FCRA) enacted in 1970, which has been amended several times, including the FACT Act of 2003 and the CARD Act of 2009. The FCRA was passed by Congress to promote the accuracy, fairness, and privacy of consumer information reported to and disseminated by consumer reporting agencies. Lenders are specifically prohibited from providing inaccurate information to credit bureaus under Section 623 of the act: “A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.” This covers information that’s accurate and helpful to a consumer's credit report, but information that’s accurate and detrimental to a consumer's credit report as well.
If you’ve got negative information on your credit report that’s inaccurate, then of course you should file a dispute with the credit reporting bureau where the information appears, being sure to include documentation that shows why the information is inaccurate.
“If the blemishes on your report are factually accurate, then time is the only thing that’s going to heal them,” said Tom Becker, Hanscom FCU’s chief lending officer. “That’s frustrating for a lot of consumers to hear, I know, but there’s no magic bullet, no credit repair service, no letter-writing campaign that’ll be able to clear them up before they age off the reports.” In most states, that’s seven years...seven long years.
However, you still have options to survive, even thrive, with negative information on your credit report.
Remember those mythical goodwill letters that supposedly will wash away negative accurate information? Instead of directing them to the creditors who’ve reported your late payments accurately, you can write a letter to explain to a potential lender why you have a blip on your credit report. Especially if you’ve never a missed a payment since that unfortunate time, it can help your case to explain in writing why the delinquencies occurred and what you’ve done since then to make sure they don’t happen again. Credit unions, especially, want to work with a member who takes responsibility for their past actions; we understand that bad things happen to good people!
And while seven years feels like a long time to wait for those negative marks to disappear, they become less glaring to new creditors with each passing year, meaning a rough patch two years ago isn’t going to make as much impact as a rough patch six months ago. You’ll even see your credit score rise, as long as you keep current on your credit obligations.
So in short: time heals all, even a credit report.