Most people when they learn about credit restoration, or what most people call credit repair, are skeptical. They're not sure that it's possible to have derogatory items removed from their credit report. Especially if they didn't pay an account within the last 7 years. It simply comes down to understanding the law and perhaps using logic as well.
What Can Be Removed From a Consumer Credit Report?
There are 3 types of accounts that can potentially be removed from a credit report with credit restoration. Obsolete items have a date of last activity older than 7 years. Bankruptcies are 10 years. Erroneous items have incorrect information that either must be updated or deleted due to the inaccuracy. And, items that the creditor does not verify.
Understanding Credit Laws
The Fair Credit Reporting Act is a law passed by the U.S. Congress in 1971. Basically, it gives consumers the right to dispute any item on their credit report. If the creditor does not respond or cannot verify its accuracy, the law says it must be deleted. By not responding to the dispute the creditor is not verifying the accuracy of that reported item. Therefore, consumer protection law kicks in, and the item must be deleted. That part is pretty simple.
But why would a creditor not respond to a dispute? Especially if the debt did not get paid and the date of the last activity on the account is within 7 years? This largely depends on the age and type of account, and how much debt is owed to them.
There are those types of accounts that have a higher probability of the creditor not responding. And, those that have a lower probability. Nothing in this category is a sure thing that a creditor won’t respond, and therefore the item will remain. Yet, there is always a possibility.
Other Factors to Consider with Credit Restoration
In my experience as a professional in credit restoration, it usually comes down to the age of the account and the debt amount. An older account of at least 2 years, but better when it is 4+ years, have a higher probability of getting removed. Even if money is still owed by the consumer.
The reason is that the account was charged off years ago by the creditor. In many cases, the creditor wrote the unpaid debt off against income in a particular tax year recovering a significant portion of the debt. Then they perhaps sold the account to a collection agency recovering even more. The collection agency that now owns the account, may or may not respond to the dispute for a variety of reasons. Perhaps they don't have the staff to facilitate a response. It could be that they do not have enough information on the account to respond. Or, maybe they don't believe it's worth their time and money to respond.
Should You Pay Delinquent Debts?
An account that has a zero balance because the consumer paid it will still show up as a derogatory tradeline. However, there is a much better chance that the creditor will not respond because there is no monetary incentive to respond. So, yes! If you can afford to pay debts showing as derogatory on your credit report, do so.
More Recent Debts
An account that is less than 2 years old has a lower probability that the creditor won’t respond. Or, the collection agency that purchased the account from the original creditor may now be the creditor of record and they may respond.
Late payments on accounts that are still open most likely will not be deleted because the creditor is reporting on that account on a regular basis. The hope here is that the consumer has a recent history of paying the account on time and that the creditor will update the account to a “paid as agreed” status.
Consider the Value of a Higher Credit Score
What is stated above are generalities. There are no steadfast rules as to why a creditor will and will not respond to a particular item that can legally be reported for 7 years. Credit restoration is an attempt to restore credit regarding these types of items. Because many creditors cannot or do not respond it's very much worth the attempt especially considering the value of a higher credit score.
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This article which was originally posted in 2014 is updated regularly and was last updated in July 2023.
ERA Credit Services is an Independent Advisor and does not directly provide credit repair services or accept funds from clients for credit repair services.