Ask Stacy: Can a Short Sale Be Removed From My Credit History?

Here’s a recent reader question about trying to heal a short-sale wound…

I have a question about removing a bad mark I got on my credit as a result of a short sale that occurred almost a year ago. I was in the Air Force but was forced to leave when I sustained a service-connected disability. Coming off active duty, I suffered a significant reduction in pay. We contacted Chase, was promptly denied any relief, and eventually had to complete a short sale.

I want to ask Chase to remove the mark on my credit, since it was the result of my disability and eventual retirement that left me unable to pay my mortgage. I realize that Chase has many programs now for military members, and even a dedicated military section. But neither was available at the time of my short sale.

I read your article on removing bad marks on your credit, but I no longer have an account with Chase to use as leverage. What can you do when you lack leverage such as any active accounts or debt owed? Also, when the creditor says they can’t remove items from your report, is there a regulation or reference that I can cite during this process?

I appreciate any help or information you can provide.

Thanks
-Kaz

Here’s your answer, Kaz!

I can understand why you think having a negative mark removed from your credit history is possible. After all, I said as much to another member of the military just last week in Ask Stacy: How Can I Clean Up My Credit History? I’ve also written about it in books like my latest, Life or Debt. Here’s an excerpt…

There’s no law that says that creditors have to report delinquencies or other negatives. In fact, they don’t have to report anything. The only delinquency that’s required to be included in your credit history is child support. Nothing else has to be reported, and anything that has been reported can be removed at the whim of whoever reported it in the first place. And that’s the secret to fixing your credit history. As you go through this process, you may have creditors tell you that the law requires that negative items be reported on your credit history. Hogwash. They put it there, they can take it off, and there’s no law against it.

Another friend of mine had a slew of negative stuff in her credit history, all the result of a time in her life when she was a lot less responsible than she is today. She’s been patiently working for a number of years, off and on, to restore her credit history to pristine condition. How? She simply writes a letter to each creditor that reported a negative item and asks them to remove it. This is a particularly effective technique in either of two situations: when you’re still a customer of the creditor or when you have an unpaid balance that you can negotiate with. Following is a letter she wrote to a credit card company that she still deals with:

January 31, 2001

Sally Sample
123 Maple Street
Anytown, USA 12345

BankCard Services
PO Box 12345
Wilmington, DE 12345

Regarding: MasterCard account #1234-4567-8910

Dear People,

As you know, I have been a loyal customer of your company for more than seven years. Over that time period, I have received many offers from other companies for credit cards with lower interest rates or other terms that could have been more attractive, yet I’ve remained with your company.

I recently obtained a copy of my Equifax credit report and was dismayed to learn that your company has reported that I made two late payments four years ago. I’m writing today to ask you to have this negative information removed from my credit history. Having become conversant with the Fair Credit Reporting Act, I’ve learned that this is easily accomplished.

As you are well aware, my record of paying on time is unblemished with those two exceptions. Since even one negative item in my credit history is one too many, please repay my loyalty and responsibility by helping me have these items removed.

Thank you in advance for your timely response. I look forward to continuing our mutually beneficial relationship for many years to come.

Your Pal,
Sally Sample

Believe it or not, this simple letter, or a variation thereof, has worked for her in five instances where she’s used it. So the odds of eliminating negative items placed by current creditors are pretty good. But don’t think that a simple letter like this will always do the trick. Sometimes she got a response back like, “I’m sorry, but we are unable to act on your request because company policy precludes alteration of accurate negative information.” That’s not a defeat; it’s a challenge. If you get a response like that, do what she did: take the fight to a higher level. For example, write again, only this time to the president of the company. Maybe you can say something like, “I am enclosing copies of two letters: one that I wrote asking your company for help with my credit history, and their bureaucratic response. They state in their reply that your company policy prohibits their helping me. My assumption is that your company policy also includes making a profit. I’ve paid you more than $2,000 in interest during the seven years I’ve been your loyal customer. Am I to understand that you no longer value my business enough to write one simple letter to Equifax?” Blah, blah, blah…you get the picture. Be a squeaky wheel for as long as it takes to get results. Remember, this is a game of patience and perseverance.

It won’t always work

That snippet from Life or Debt, as well as posts I’ve written, may leave the impression that having negatives removed from your credit history is as simple as asking. This isn’t true.

The whole purpose of having credit histories on file with credit reporting agencies is so potential lenders can accurately gauge your history of repaying loans. If creditors started removing negatives every time a former customer requested it, everybody’s credit history would be flawless – and nobody’s credit history would be accurate. The entire system would become worthless to lenders.

Today, there are literally millions of people walking away from underwater mortgages, short-selling their homes, and failing to meet credit card and other loan obligations. And most have an excuse. They’ve gotten sick, gotten hurt, lost a job, gotten divorced, or otherwise suffered, often through no fault of their own. Unfortunately, bad luck isn’t normally a good enough reason for a creditor to remove negatives from your credit history.

Imagine I borrowed money from you, failed to repay it as agreed, and cost you a ton of money and aggravation. Then one day I come along and ask you to pretend like it didn’t happen by contacting a credit reporting agency and saying the accurate late payments you reported were, if fact, not accurate. What would persuade you to do that? If the situation were isolated and I was still a good customer, you might. If I offered you money you might not otherwise collect, you might. But if I simply said that I’d encountered some bad luck? Not likely.

Kaz asks, “What method should be taken in a situation where you lack leverage such as any active accounts or debt owed?” The answer, Kaz, is that if you don’t have leverage, you’re probably not going to succeed. That doesn’t mean you shouldn’t try, but keep your expectations low.

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

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
21 Purchases You Should Never Skimp On
21 Purchases You Should Never Skimp On

With some items, it makes sense to pay a little more rather than hopping on the lowest price.

8 Ways to Snag Extra Savings at Walmart
8 Ways to Snag Extra Savings at Walmart

Are you aware of all these ways to boost your savings in Walmart stores and at Walmart.com?

5 Ways to Put an End to Junk Mail
5 Ways to Put an End to Junk Mail

Here’s how to keep unwanted mail from clogging your mailbox and trash can.

27 Things You Should Never Pay For — and How to Get Them for Free
27 Things You Should Never Pay For — and How to Get Them for Free

When you know the tricks, you can save big on all kinds of useful things that others pay for.

3 Ways a Health Savings Account Can Improve Your Finances
3 Ways a Health Savings Account Can Improve Your Finances

Open an HSA in minutes to help you save on taxes, cover medical expenses and grow your retirement nest egg.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Whether you resell it for a big profit or add it to your own wardrobe, this type of clothing is a hidden steal.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

Taking a Multivitamin? Here’s Why You Should Reconsider
Taking a Multivitamin? Here’s Why You Should Reconsider

A new study has bad news for the millions of Americans who spend money on multivitamins.

21 Items to Cut From Your Budget That You Won’t Even Miss
21 Items to Cut From Your Budget That You Won’t Even Miss

Start off the new year by implementing these small-but-smart savings strategies. They’ll soon add up.

These 10 Postal Price Hikes Start Next Week
These 10 Postal Price Hikes Start Next Week

Starting on Jan. 24, the price of various mail and shipping services will rise.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

10 Cars You Are Most Likely to Keep for 15 Years
10 Cars You Are Most Likely to Keep for 15 Years

The cars that owners hold onto the longest have one thing in common, a new study shows.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Prepare to Pay More for These 31 Drugs in 2021
Prepare to Pay More for These 31 Drugs in 2021

More than 700 prescription medications have seen price hikes so far this year. Here’s a look at the worst.

5 States Lowering Taxes This Year and 2 Raising Them
5 States Lowering Taxes This Year and 2 Raising Them

State personal income tax rates, brackets and deductions just changed in these places.

The 10 Golden Rules of Becoming a Millionaire
The 10 Golden Rules of Becoming a Millionaire

I’m a millionaire several times over. I got here the same way you can — by following these simple steps.

7 Tricks to Cleaning Your Bathroom Faster
7 Tricks to Cleaning Your Bathroom Faster

These tips can get your bathroom sparkling with little time and no elbow grease.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.