Ask Stacy — How Can I Get a Delinquency Off of My Credit Report?

There aren’t many upsides to getting older, but there’s at least one: experience. You’ve seen and done so much that you’re in a position to lend a hand to those who haven’t been around the block as many times.

Such is the case with this week’s question. Except for the creditor and amount, it’s nearly identical to an experience I had more than 20 years ago.

Here’s the question:

My husband and I are trying to pre-qualify for a mortgage, and when we checked his credit report there was a delinquent account we were not aware of. After disputing this account, we discovered his ex-wife had put him down as a responsible party on a dental bill for his daughter. Experian will not remove it from his credit report, and it has hurt his score. The disputed amount is $188. If we pay this, will it improve his score in time for a house closing later this year?
— Lynette

Before we answer Lynette’s question, here’s a video we shot in New York a couple of years back called “Credit Score Myths: Fact vs. Fiction.” It’s the only time in my TV career I was able to interview Big Bird. Check it out.

Now, on to Lynette’s question.

Zombie delinquencies can happen to anyone, including me

Back in the mid-1990s, I applied for a mortgage to buy a house in Cincinnati. Since I’ve always paid my bills on time, I assumed my credit would be flawless, so I saw no need to pay for an advance copy of my credit report. (They weren’t free back then. This was before the days of free reports from AnnualCreditReport.com.)

Although I foolishly didn’t pull my credit report, you can bet my mortgage lender did. And what did they find? A mysterious delinquent account for $200.

Like Lynette, I checked it out. At first I thought it as a mistake, but then it hit me.

I had moved to Cincinnati from Jacksonville, Florida. While living in Jacksonville, I had disputed a termination fee from a cellphone company. I won’t bore you with the details, but, essentially, I felt justified in refusing to pay their $200 early-termination fee. After several rounds of heated phone negotiations, the cell company stopped bothering me, and I smugly assumed they’d either seen things my way or given up.

As it happened, however, while they did give up, they didn’t see things my way. They had attached a $200 delinquent account to my credit history, which had been sitting there like a snake in the grass ever since. Now it had bitten and was poisoning my chance to get a mortgage at the lowest rate.

Like Lynette, I needed this problem to disappear, and fast.

How to make delinquencies go away

Here’s what I did. I called the cell company and told them I’d give them $100 to settle the account, provided they agreed in writing to completely remove the entry from my credit history. They agreed to do so, and sent me a signed letter to that effect. Only after I’d received it did I send them their money.

Within a couple of weeks, I was $100 poorer, but the delinquent account had disappeared from my credit history.

Lessons from this experience:

• If you don’t pay a debt, the company you’re not paying isn’t going to be happy.
• That unhappy company may stop hounding you, but that doesn’t mean they’ll go away. They can add a notation to your credit history indicating the debt wasn’t paid and damaging your credit. The pain will last for seven years on your history, although it will be less significant to your credit score as it ages.
• If you want that pain to go away before it expires, you have leverage, but only until you pay the debt. Once you’ve sent the check, the company has no incentive to help you. So …
• You should never settle a debt without first obtaining a written guarantee from the company stating it will remove any and all negative information pertaining to the debt from your credit history. This written, signed letter must be received before giving them a dime.
• When dealing with anyone trying to collect a debt, whether the original creditor or a collection agency, verbal assurances are meaningless. If it’s not in writing, it never happened. Period. No exceptions.
• Simply paying off the debt won’t help. You’ll still have the delinquency on your credit history, so you’ll still have the damage to your credit score. If you want to improve your score, the goal is to get the delinquency removed. For more, see “Ask Stacy: Will Paying Old Debts Improve My Credit Score?

If a creditor tells you it won’t remove the negative information, fine. That’s their prerogative. But if they tell you they can’t, that’s hogwash. Nearly any company that can put negative information on your credit history can remove it.

Debt negotiations can be tricky, and the company you’re negotiating with is probably going to be better at it than you. If the amounts are large, you might want to get a consumer attorney or other expert in your corner. If not, at least read about how to do it. There’s plenty of free information on this site and others. For example, check out “Ask Stacy: Can You Help Me Clean Up My Credit History?”

As for Lynette, she should have her husband do what I did. Contact the company, not the credit reporting agency, and offer to settle for a lesser amount. When he’s negotiated that amount, he should then insist as part of the deal that the company remove any negatives from his credit history. After he receives a written, signed document stating the amount and confirming the negative item will be removed, he should pay the agreed-upon sum.

The delinquency should disappear shortly thereafter, and his credit score should rise.

Now, read more about how to improve your credit score by reading “Boost Your Credit Score Fast With These 7 Moves” and “How I Got a Perfect 850 FICO Credit Score.”

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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate. If you’ve got some time to kill, you can learn more about me here.

Got more money questions? Browse lots more Ask Stacy answers here.