Tips to fix delinquent credit report
Fix delinquent entries on your credit report to improve your creditworthiness. Payment history and delinquencies account for one-third of your credit score, and despite your actual score, the appearance of recent delinquencies on your report never appears in a favourable light to lenders. Fortunately, you can resolve and remove delinquent entries to increase your chances of obtaining new credit.
Request Your Credit Report
First, make a thorough review of your credit report. Though you can purchase a report directly from one or more of the three major credit reporting bureaus (Equifax, Experian and TransUnion), consider reviewing your credit report for free.
If you have recently received a denial for credit, you will receive a letter explaining the reasons for the rejection. This letter also affords you the opportunity to request a free credit report for the reporting bureau within 45 days of the rejection notice.
Request a free copy of your credit file disclosure from each of the major agencies once every 12 months through the agencies' central source website---AnnualCreditReport.com.
Or look for other credit protection websites that will provide you with a free copy of your credit report once you enrol in a credit monitoring program. Although the request will require that you provide a credit card number, you will not receive any charges you cancel the membership within the trial period.
Review Your Credit Report
Review each section of your credit report that contains open accounts and collection records and search for Xs, frowning faces or red lettering. These notations indicate delinquent accounts, often called derogatory accounts. Derogatory marks include payments made 30, 60, 90 or 120 days past the due date. If you have not made a payment on an account within 120 days of the deadline, the credit company will likely transfer the account to a collection agency, foreclosed upon it or repossess it as defined by the account terms.
Make note of all delinquencies and derogatory marks, and look for any inaccuracies or accounts that are not yours. Unfortunately, identity theft occurs regularly and credit reports often contain inaccurate information. As you review, create a list or spreadsheet so you can organise your accounts by date and make notes.
Above all, continue to pay bills on time, which will show lenders that you now manage your finances effectively and have begun to work on repairing past credit mistakes.
Everyone has fallen on bad luck in the past, and you may have old delinquencies haunting you. Collections, reposessions and foreclosures will fall off of your credit report seven years from when the situation occurred. Credit reports show payment history on open accounts spanning the past 24 months. If your delinquencies lie within months of the drop-off dates, wait until those items disappear before applying for more credit.
If the delinquencies occurred within the past 24 months or on a paid closed account, contact the lender with a letter of goodwill. Explain the circumstances that resulted in missed or late payments, and request that the lender update the reporting to remove the delinquencies. If your account is in good standing, the lender may take you up on that request; after all, you are a valued customer.
If you are currently past due on accounts facing collections action, contact the lender to work out a payment arrangement. Original lenders would rather receive full payment from you than the percentage they might receive from a collections agency.
If an account has already gone to collections, arrange a pay for delete agreement. Write to the collector offering to pay all or a portion of the balance due in exchange for removal of the collection record from your credit report. Some collection agencies respond favourably to this strategy. Depending on the age of the collection, you can usually pay less than the full balance.
If you discovered inaccurate information or possible instances of identity theft in your credit file, dispute the incorrect information as permitted by the Fair Credit Reporting Act. Mail or e-mail your dispute to the credit reporting agency. The reporting agencies will investigate your query. If they deem the information truly incorrect, they will remove the record(s) from your credit report.