How to Remove Delinquencies From Your Credit Report

Past mistakes can haunt you - and if it is a grave financial mistake, like a delinquent account, it can haunt you for seven years on your credit report. However, it has often been seen that delinquent accounts on your credit report keep nagging you although they should have been taken off your report after a period of seven years. What should you do in such a scenario? Read on to find out.

What Is a Delinquent Account?

If you have a credit account and you fail to make payments after the due date, your account is considered to be delinquent. Ideally, a delay by one day results in delinquency. However, in practice, the prevailing trend among lenders is to wait for two missed payments to declare an account as delinquent.

Delinquent accounts hurt your credit score significantly. They also spoil your credit history, as they appear on your credit report and stay on it for seven years. Delinquent accounts won’t help you when you want to remove the records either.

Consequences of Delinquency

Delinquent accounts can have short-term as well as long-term repercussions. These are the possible troubles that you may face if you drive one of your accounts into delinquency.

1. A single delinquent account can cause an immediate drop in your credit score.

2. Multiple delayed or missed payments can result in a 100 point drop in your credit score.

3. Lenders will not trust you, and you will not be able to get credit in the future.

4. Your credit report will be tainted for the next seven years, as the delinquency will be recorded on your credit report. Even after you settle the debt, the record will remain and serve as a warning to potential lenders that you might not be reliable with credit.

5. The record might not be auto-removed after seven years, and you might have to spare a lot of time and effort to get the error rectified.

How to Remove a Delinquent Account

Credit bureaus strive to remove the negative information before the completion of seven years - roughly around six years nine months. However, they often make errors and fail to remove the records. In such a situation, the onus lies upon you to act quickly and get the matter resolved. Experts from mymoneykarma are here to guide you.

1. Verify and Confirm the Age of the Debt: If you suspect that negative information is on your credit report for longer than it should be, the first step for you would be to pull out your credit report and scrutinize it to verify the exact age of the delinquency. It doesn't matter if your account was written off or sold off to an external collection agency. The date considered is the date on which you had initially missed or failed to make a payment to the original creditor. If your delinquency date was 1st January 2010, the information must not stay on your credit report for a single day after 1st January 2017. Keep your old credit reports handy - you might have to fish out the date on which the creditor reported your delinquency.

2. Check with Each Bureau: Each credit bureau need not make identical credit reports. The creditors might not report to all the bureaus, and thus, your credit report from each bureau will differ. The delinquency may not be there in all the reports. Therefore, it is ideal that you get hold of a copy of your credit report from all three bureaus and inspect them.

   You are entitled to get a free copy of your credit report once a year from each bureau. However, you can access your credit report at any time by paying a nominal amount to the concerned credit bureau. You must find out which bureaus are still listing the outdated old debt and contact them to get the record removed. For regular updates, you can check your credit report with mymoneykarma.

3. File a Dispute: Once you have zeroed in on the credit bureaus that haven't removed outdated or inaccurate information from your credit report, you need to contact them and file a dispute to remove delinquent accounts. The three main credit bureaus -  TransUnion, Equifax, and Experian - have their own dispute management system. You could fill up and submit the dispute form online or download the form and send it to the bureau via post. When you register a dispute, you should attach copies of all the documents needed to support your claim. You must make your plea convincing and foolproof so that the credit bureaus take it seriously. The credit bureau will contact the reporting creditor to verify your claim and settle the dispute accordingly. The issue should ideally be resolved in 45 days. Additionally, you could also consider approaching the reporting creditor with the issue to ensure quick redressal of the problem. In either case, try to obtain an acknowledgment of receipt of the complaint to keep proof of the date on which you had filed the dispute.

Why Late Payments Matter

Most money lenders charge a late payment fee nowadays. These penalty fees can vary according to how late you paid, the type of loan, and more. Some money-lending organizations even increase the yearly APR as the penalty, even if you make a single late payment.

Paying debts late can have severe financial consequences, as it can negatively affect your credit report. If the score drops significantly, you won’t get any new loans. Since the repayment history makes up for 35% of your credit score, you don’t want to be making late payments at all.

A single late payment may not do much harm, but several of those in quick succession may do a lot of damage, making it hard for you to get new loans at all. Even if you do manage to get a new loan, the terms would be strict, and the interest rate would be much higher.

If you fall far behind on your payments, and if the bank deems so, your debt account could be transferred to a debt collection agency. When this happens, the impact on your already bad credit score shall be more significant still. It will be tough to then improve a bad credit score.

Check Your Updated Credit Score

Delinquent accounts are something that you don’t want to have on your plate. Thus, you should regularly check your credit score report at least once a year. If there are debts to be paid or delinquent accounts to take care of, deal with them first.

To Sum Up

Do not let these problems grow worse with time. If you do not pay attention, you could be suffering the consequences for no apparent fault of yours. The process might be a bit too tedious, but you must act upon such misinformation if you find any. Always keep an eye on your credit score so that you can identify major fluctuations.

Take action if you find any discrepancy. The dispute resolution systems of credit bureaus are known to be quite useful. However, if they fail to resolve your problem, you could approach the banking ombudsman or avail legal help.