If a consumer has an outstanding balance with a lender, that lender may accept a partial payment of that balance to settle the account. Lenders report the status of the account to the bureaus not as paid but as settled. According to MyFico, lenders typically settle accounts once the account is already past due. Under the Fair Credit Reporting Act, however, negative accounts can only remain on your credit report for seven years. If you have a settled account that is beyond the statute of limitations, the FCRA gives you the right to dispute that item with the bureaus and have it removed.
- Skill level:
- Moderately Easy
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Things you need
- Credit report
- Dispute letter
Order your credit report. The Fair and Accurate Transaction Act of 2003 gives consumers the right to receive one free credit report from the three major bureaus: Equifax, Experian and TransUnion. You can order the report from the bureaus' websites or from the site established under FACTA: annualcreditreport.com. You can also order the report by phone or mail.
Check the report for errors. Ascertain if the account in question still appears on the credit report. Bureau information updates regularly, so data may have changed since you last viewed it.
File a dispute. The online form at the bureau's website allows you to specify which accounts you're disputing and why. You can also file a dispute over the phone with a customer service representative or by mail. If you mail your dispute, you should include a dispute letter that details the accounts in dispute and the reasons for the dispute and include supporting documentation, if necessary.
Print your credit report. If you access it online but don't print it, the bureau may charge you a fee to view it again at a later date. FACTA only provides for one free report each year. Also print out a copy of your dispute form if you filed it online.
Give the bureau up to 30 days to respond. Under the FCRA, that's how long the bureau has to investigate your claim and make corrections. Investigation results are sent to you via e-mail if you filed your dispute online. Results from disputes submitted by mail or over the phone will arrive by regular mail. In addition to the results, the bureau will include an updated copy of your credit report that shows the removal of the settled accounts.
Tips and warnings
- Under the FCRA, bureaus are not required to delete accurate negative accounts that are still within the statute of limitations.
- The Federal Trade Commission warns against paying a company to repair your credit because it could be a scam. You can make credit report corrections yourself for free.
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