Ask Stacy: How Can I Clean Up My Credit History?

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Here’s an email I recently received from a reader in Afghanistan. While ridding the world of bad guys, this Marine would also like to rid his credit history of two bad marks he got years ago by using a technique I suggested in the story Should You Pay For Credit Repair? Here’s what he said…

Sir,

I was reading an article that said you can send letters to request to get bad marks taken off of your credit score, that a link with advice from you was at the bottom, but due to some of the internet restraints we have on us in Afghanistan I cannot access the link to look more into it. I am now 26, an officer in the Marine Corps, and financially secure. I own my car, have a good investment and savings plan, and currently have no debt myself unless you account for the car payment and minimal credit card debt my wife has and our rent.

When I was in college I had a minor medical issue and there was a problem with my parent’s insurance and two doctors appointments were not paid for. We were trying to get the insurance to cover it like they were supposed to, but ended up getting hit for both by a collector. As soon as I got the notices in the mail I immediately paid them off without ever settling with the insurance company. I would have just paid them earlier, but did not know that it would end up affecting my credit score so much and the advice from my parents was to hold off while they worked the insurance. This occurred back in 2007.

With the credit check I use I currently have a 699, which isn’t bad, but the credit check also let me adjust things to see how it would affect my credit score, without those two blemishes I would be in the 800 range. I have looked into it and read that they should fall off my record after 7 yrs. I am looking to get stationed overseas for the next three years and plan on buying house once I get back. By that time, those blemishes should have disappeared.

Should I look into trying sending a letter to get them removed or will they disappear (like I read) before I start looking to make the major purchase of buying a house and not worry about it?

My wife is also in the military and her credit score is in the high 700s, so I am not really worried, just wondering if you can confirm that those blemishes should be removed after seven years or should I try sending the letter?

Respectfully,
Chris

First, thanks for your service – those of us stateside appreciate it more than you know.

Now to your question. The best course of action for you, Chris, is to relax and do nothing. By the time you start looking for a mortgage (which you can do here on this website), those bad marks should be gone.

But there are a few things to note regarding Chris’ question, so let’s explore this issue a little further.

Getting negatives erased from your credit history

While you should always keep an eye on your credit score, the time to start getting obsessive about it is about a year before you intend to borrow. That means finding your actual score by going to MyFICO.com and paying for a peek. Using a score estimator like Chris did isn’t nearly as useful as seeing the real thing. Raising your score takes time, so allow plenty to do it.

If you find that your score is low, what can you do? The article mentioned above has the detail, and you should read it, but here are the short strokes.

1. Get your reports. Since your score is derived from your credit history, start by going to AnnualCreditReport.com and getting a free copy. Experian, Equifax, and TransUnion have to supply one free copy per year.

2. Check for accuracy. Make sure your name, present and past addresses, credit inquiries, Social Security number, and account information (balance, payment dates, status) are all correct. If something isn’t right, it should be disputed online, or by sending the agency a letter.

3. Deal with the negatives. There are basically three ways to get negative marks removed from your credit history, two of which Chris mentions above. The first is to let them expire: late pays and collections should disappear after seven years, bankruptcies after 10. The second way is to challenge the negative mark by treating it like a mistake and disputing it with the credit reporting agency. This works if the agency is unable to verify the information with the creditor. If they can’t because the creditor doesn’t respond or is out of business, the negative has to be removed. The final way, which Chris also mentions, is to write the creditor and ask them to remove it.

The reason I suggested Chris sit tight rather than writing creditors and asking them to remove his negatives is because it’s highly unlikely he’d succeed. Once a debt is sold to a collection agency, the original creditor – in Chris’ case, two doctor’s offices – no longer own the debt, and have nothing to gain. Getting any creditor to remove negatives is an uphill battle, and works best if you’ve got leverage – for example, you have an unpaid bill to bargain with, or you’re still a good customer. The doctors Chris failed to pay probably took a big hit – at least 50 percent – when they sold those accounts to a collection agency. It’s unlikely they’ll go out of their way to help him.

There is one other thing Chris could do. He’s entitled to add a 100-word explanation to anything in his credit report, and the explanation he provided above is a pretty good one. But while explanations are better than nothing, they probably would do little to improve his score.

Also important to remember: The older a negative is, the less it affects your credit. So if Chris does nothing, he should still see steady improvement in his score as time passes and expiration day approaches.

Got a question for me?

If you have a question of general interest, send it my way. I get tons, so please don’t be offended if I don’t get to yours, but I’ll do my best!

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