Clearing your credit record

Q: How do I go about clearing up old charge-offs from my credit report?

A: A charge-off is an old debt that a creditor has written off as uncollectible. Generally, this happens after six months of nonpayment. But that’s not the important number you should remember here. The most important one is this: A charge-off can stay on your credit report and bring down your credit score for seven years.

“If the charge-offs were valid, then it is my opinion that she would have to wait the required period seven years for it to disappear,” says Certified Financial Planner Richard Russo of KR Financial Services in Hollywood.

How then can some companies promise to wipe out old debts or charge-offs or other negative marks on your credit? They can’t. “There is no magic cure for negative information in credit reports,” says Gerri Detweiler, personal financial advisor for Credit.com and an expert on debt.

But you, on your own, can improve the report. You do this by making sure your credit report is absolutely accurate. And by handling credit well now.

A credit report changes over the years. You said the charge-offs were in the past, which is good. Because the older a negative mark is, the less impact it has on your credit score. If you have built a positive credit record since then, that takes the sting out of the old charge-off until it finally drops off your record.

You should make sure your credit report is completely accurate, too. Here’s how to do that:

• Get a copy of each of your credit reports.

• You can make this request online at www.annualcreditreport.com or on the telephone at (877) 322-8228.

• Ask for all three from TransUnion, Equifax and Experian. They can be different and you want to clean them all up.

• Look them over carefully.

Detweiler points out that a charge-off should show a zero balance. (If it does not and a collection agency is trying to get you to pay that old debt, the collection agency may put the same balance on your report a second time. That makes it look like you have more bad debt than you actually do, which would bring down your credit score. So look for the zero.)

Perhaps, the seven years have already gone by and the charge-off is still there. You can ask the credit bureau to remove those old items. The clock on those seven years starts on the date of last action on the account most likely, the date of the charge-off.

Or maybe there’s an error as to when the debt was incurred. Remember, older items have less impact on your credit, so you want to have the right date there.

Florida law, for example, gives creditors up to five years to try to collect a consumer debt. After that, the creditor cannot sue you for the debt.

But, the creditor can sell the debt to a third-party collector who can try to collect for as long as he or she wants to try. Several years ago, debt collectors would report old debts to the credit bureaus with a new date, a practice known as “re-aging.” This has been prohibited by federal law since 2003, but the practice used to be quite widespread. If the age of your debt is incorrect, you can challenge it and get it removed.

l If you find something in error or that you do not recognize as your own, you notify the credit bureau.

You can do this in a letter or online. There’s usually an address on the report itself or on the website for each of the bureaus. At TransUnion, for example, it’s a “request for investigation,” and you download the from online.

Under the Fair Credit Reporting Act, the credit bureau must investigate the issue. If it finds the information is inaccurate, incomplete or it cannot be verified, then it has to be removed, usually within 30 days. If you notify the bureau that the item is too old to be on your record, if that is correct, it has to be removed.

If all this doesn’t happen, you have to right to sue and seek damages.

If you want to know more about your federal rights, the Federal Trade Commission has a good site explaining them at www.ftc.gov/credit.

It may surprise you that on an old debt, one that is beyond the time limit for being collected, a debt collector may call you anyway. This happens because debts get resold.

What you should do: Ask the collector for his or her address. Send a letter saying that you don’t want to be contacted and that you don’t owe the debt and it is beyond the statute of limitations, Detweiler suggests. Once you send the letter, federal law says the collector must stop contacting you.

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