I have learned a lot during my time working with a mortgage company as a loan processor and also in repairing my own credit, which I so irresponsibly destroyed in my younger years.  Tons of training, research, and personal experience have taught me the ways of credit repair.  Now my friends and family are all asking me how I did it.  So I want to share it with you.

If you have several collections that you are working on, then I recommend getting Equifax 3 in one credit monitoring that notifies you of changes to all 3 reports.  I have been a member for many years and it has been really helpful in my credit repair.  It lets me know immediately when something changes.  If you don’t have that, then you have to wait around to get updates from the 3 bureaus by mail most of the time.  Also, you can refresh your Equifax report an unlimited number of times.  That helps because you can keep submitting disputes real easy.

First thing you should do is look for any collections that are more then a few years old.  Dispute them as statute of limitations expired.  Even if you know that it hasn’t been over 7 years since the first delinquency, do it anyway.  A lot of companies go out of business or don’t respond fast enough and the collection gets deleted.

Then, for those accounts that are fairly new, dispute them stating that you have no knowledge of the account.  If it allows you to enter a message, ask them to delete it.

Then, if those don’t remove the items… wait a little while, then dispute again stating the account contains multiple inaccuracies and to verify all information.  This should be done AFTER all of the above.  If the collector cannot verify all info, they have to delete the account.

Don’t worry about doing all of these disputes.  It won’t hurt anything.  Unless you are disputing an installment account with a long payment history, your score may drop while it is being investigated.  It will go back up when it is done.  Do each step in that order and wait for the results before starting each next step.

While you are doing that, DO NOT communicate with the collection agencies.  You can accidentally say something to them that can restart the statute of limitation 7 year period.  If you so much as mention any intent to pay them or take care of the account, it can restart the clock.  The 7 year period starts on the date of first delinquency.  Make sure you get that date directly from the credit bureau and not the collector.  That 7 years is the date the item can no longer legally be reported.  The 7 year mark is your final option to get a stubborn item removed. 

If the steps above do not work, then you can mail a letter requesting verification of the debt to the original creditor and current collector.  You can find these letters online.  Print and send.  By law they have to respond.  If they don’t pursue the matter.  Verify all the information they provide is the same as with the bureau.  Any descrepency, send it to the credit bureau by mail with a dispute.

If all of that fails and you cannot wait 7 years for the item to go away, find out if the account is still with the original creditor, if the original creditor is using a collection company, or if the account was SOLD to a collection company (no longer belongs to original creditor).  If it has not been SOLD to a collection company, contact the original creditor (bypass any collection company collecting for them) and offer them a settlement amount.  If it has been sold, then contact the collection company.  It is in your best interest to work with the original creditor because they are usually more flexible.  In your letter, state that you are not agreeing that the debt is yours.  State that you only agree to settlement if they agree IN WRITING to completely delete the item from your 3 reports and to never report it again.  You will get a lot of resistance to that request, but stand firm.  Act like it’s not a big deal if it stays there for 7 years.  Many will try to say they do not have the ability to delete an item from a credit report.  Either they are lying or they are misinformed.  Any company that reports any type of account can have it removed by request at any time, for any reason.  They just don’t want to or don’t know they can.  Be confident and tell them you are experienced and know what you are talking about.  They will try reall hard to change your mind.  If they still say no, say forget it and leave them alone for a while.  Ignore them.  Then attempt the offer again.  Keep doing that until they cave.  They usually do at some point when they realize they won’t get any money otherwise.

If none of that works, and you really need to make an improvement on your credit report, offer a settlement without the demand for removal.  But, make sure they agree to mark the item as paid in full (no mention of settlement on your report… that looks bad) and provide you with documentation.  Agreeing to any sort of settlement or payment plan restarts the 7 year clock.  So this should be a last resort.  Once the item is showing as paid, your score may go up a bit.  Having a collection showing as paid is nowhere near as beneficial as having it removed.

If you have medical collections, note that they are not as bad as other collections.  Banks take them less seriously.  Still bad, but not as bad.

Take care of bigger debt collections prior to small collections.  New collections are worse then old collections.  Prioritize by that.

If you have an installment or revolving account with late payments, try all of the above.  If that does not work, submit a dispute saying the account was never late.  If they did not keep proper documentation then they have to remove the late marks.

You might think all that sounds silly… that there is no way a collection company would let those things happen.  But here is what I have learned and personally experienced…

The credit bureaus have strict legal guidelines.  The collector has to respond within a certain time and they have to have verifiable documentation to support their claim.  Collection companies go out of business a LOT.  Items are not deleted when that happens.  Only if you dispute the item.  Collection company staff makes mistakes in the reports, then the delay to respond causes the item to be deleted.  Or the company may just not respond fast enough and it is deleted.  The company may have thrown out or misplaced the supporting documentation so the item must be deleted.  Sometimes the account may have been sold to another company and the one on your report must remove the item.  There should never be any item reported by more then one company on your report.  One should be deleted.

Also note that submitting disputes by mail require the credit bureaus to do a more thorough investigation.  Results tend to be better when done by mail.

For medical collections for something like a local doctor or dentist, I have found that meeting with them in person and very nicely requesting a letter of removal in exchange for full payment often works out well.  Local people are more willing to help a person out that is making an attempt to pay.  You may have to convince them that they are capable of requesting the item be removed.  A lot people think they can’t.  If they are stubborn, simply say “well I prepared this letter which requests removal of the item from my credit report.  All you need to do is sign it for me.”  They have nothing to lose except your money so chances are, they will sign it as long as it is well written and easy to understand.

I found that it was really helpful to create an Excel spreadhseet with my collection account information in it.  Each item has the following important information, each in their own columns, color coded, so I can easily monitor changes and progress.

• “CB” – Credit Bureau (E, Exp, TU) – tells me which bureaus the item is reported on.  Not all items are on all 3 bureaus.
• “DR” – Date Reported – tells me what date the item was last reported.  That gives me an idea of how active the collection company is in reporting.  If they don’t report in years, that is a good indicator they are not very pro-active in reporting.  Or they could have went out of business.
• “DLA” – Date of Last/First Activity/Delinquency – Get this date from the credit bureau. This is the date that the 7 year clock starts at (10 for bankruptcy).
• “DOR” – Date of Removal – use the DLA to calculate 7 years and the date of removal.  This is the very latest date anyone can ever report that item to the credit bureau.
• “Company Name”, “Account Number”, “Address”, “Phone Number”, “Original Balance”, “Current Balance”
• “Settlement Amount”, “Settlement Date”  - this is any settlement amount offered to you or by you.  Use the comment tool to keep notes of any correspondence and monitor the creditors actions.
• “Notes” and comments – Always keep track of information such as if an item has been sold to another company (keep all contact info), any correspondence regarding the item, your dispute activities and results, etc.

Monitoring those items will help you to anticipate a collection companies next move.  You can tell the ones that are serious and the ones that are more laid back and easy to deal with.  A company that offers you a settlement amount is always going to be the most flexible as that is a sign that they realize they may not get all, if any, of the money from you and are willing to take what they can get.

Keep in mind that as an item is sold from company to company, each following buyer has less of an investment in the item.  As it is sold, the previous company takes a loss on the original amount in an attempt to regain some of its funds via sale to another collection company for a lesser amount.  So, if you have an item that has been sold 3 times or more, then you should be confident that if you need to offer a settlement amount, the will most likely accept far less then the original balance. 

Also, the older an item gets, the more a collection company realizes it is unlikely they will ever collect that money.  So, if you really need an item removed, know that time is your friend.  The older an item is, the more power you have in the situation.  They know that in 7 years, they can’t do anything about it.  However, you should also read this blog about the different collection actions that could be taken against you.

Remember, if nothing works immediately, wait a year or so and do it all again.  Things change that you cannot see and what might not have worked at one time, may work later.  It took me 13 years to completely repair my credit.  I saw immediate changes in the first year (many items removed), continued changes throughout the remaining years, and this is the year (August) that I finally get the last item off of my credit… my bankruptcy.

Read my other blogs on credit bureaus and consumer credit for more information on how things work.