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Most consumers are not aware of this, but there are federal laws governing credit reporting and collection procedures. An educated consumer can use these laws to have old or inaccurate negative items removed from their report.
The first step is to understand the statute of limitations. Any negative account should only stay on your credit report for seven years from the date of last activity. The date of last activity is the last time you made a payment on that account. Once seven years have passed from the date of your last payment on account it must be deleted from the credit report.
The exception is for bankruptcies which stay on for 10 years. The accounts included in the bankruptcy are still required to be deleted after seven years, but the actual bankruptcy itself will stay on for 10 years.
There is also a law regarding accurate reporting. If the credit bureau is reporting something negative against you that is causing you harm, you have the right to request verification of that information. The credit bureaus, by law, must investigate your dispute and respond to you within 30 days with their findings.
Even if an account truly belongs to you, if there are any errors in the way it is being reported, you have the right to dispute those errors and the inaccurate details of that account. If the creditor cannot provide verification to the credit bureau the account is usually deleted.
Once you have determined all of the accounts on your credit report that need to be disputed, it is time to write your dispute letter.
When you write your dispute letter, be sure to include your name, address, Social Security number and date of birth. You should also list each account that you're disputing with account numbers and provid a detailed dispute description for each account.
You should always mail your dispute letters via certified mail, with a signature required return receipt. You should never dispute online. The reason that you mail your dispute is that it must be processed manually instead of automated, and you can start to create a record of communications of your dispute with this creditor.
If you have to mail the second round or third round letters to the same creditor, you should also use certified mail, signature required return receipt. If they neglect to follow the law and they do not respond to you in the required period of time you will have documentation of your requests.
Continue to press for documentation proving what they are reporting against you.
There is a $1000 civil penalty if a creditor does not respond to your dispute. I had a client in the past who filed a small claims lawsuit against a creditor who had not responded to three certified letters spaced out over 90 days.
The client received a call from the creditor's attorney two days before the court date asking what can we do to make this go away. The client did not push the issue of the civil penalty and just asked for a deletion letter which he promptly received and dropped the case.
If you read up on the rules you can really hold these companies to the letter of the law and improve your credit score faster.
If you don't feel like studying this and managing it yourself there are multiple companies that will do this for you. If you choose one of these companies make sure to research them on the Internet for complaints.
We cannot endorse any particular company, but if you want to call us we would be happy to tell you if we have ever had a bad experience with any company that you would like to ask about.
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