If a financial institution or business extends credit to you, but you fail to make the required payments, then you are in default. Many people have defaulted on loans and credit cards due to a financial hardship occurring in their life. Unfortunately, creditors normally report this type of negative information to the credit bureaus. Having defaults on your credit history can drastically damage your creditworthiness. However, there is a way to properly remove a default from your credit report.
Review your credit report. You should order a copy of your credit report from the major credit bureaus--Experian, TransUnion and Equifax. Carefully review each credit report and make a note of the defaults that appear on each report.
Contact the creditor to bring your account current. Try to negotiate a reasonable payment plan or settlement offer with the creditor. Be sure to get the payment plan or settlement offer in writing. In addition, verify that the creditor will update your account status with the credit bureaus as soon as you bring your account current.
Submit your payments in a timely manner. If you are able to negotiate a payment plan with the creditor, it is important that you stay current on your account. As long as you make the required monthly payments, your account will continue to remain in good standing, and this positive information will appear on your credit report.
Confirm that your account information has been updated with the credit bureaus. Your creditor should report your positive payment history each month to at least one of the credit bureaus. If your credit report has not been recently updated, you should contact the creditor as soon as possible about this matter. By law, creditors are required to report accurate and current information to the credit bureaus in a timely manner.
Submit a dispute form to the appropriate credit bureau. If your credit report still shows that your account is in default, you should dispute this inaccurate information with the credit bureau. When you submit a formal dispute form with the credit bureau, they will contact the creditor and validate your account status and payment information. As a result, the credit bureau will update your credit report with the correct information.
Be sure to check your credit reports every month to ensure that the creditor is reporting your payment information to the credit bureaus.
Tips and warnings
- Be sure to check your credit reports every month to ensure that the creditor is reporting your payment information to the credit bureaus.