Q: Can bad credit be erased?
A: Bad credit can be erased one of two ways; the first of which is time.
Negative credit data must be removed from your credit report after seven years,
although oftentimes you have to ask the credit bureau to remove it. The one
exception to this seven-year rule is Chapter-7 bankruptcy, which stays on your
credit report for ten years.
The other way to erase bad credit is simply to ask. If the negative
information is incorrect, then you can demand that it be removed from your
credit report. The credit-reporting agency will then contact the supposed
creditor, and if the information really is inaccurate, the creditor will either
admit that it's wrong or will be unable to provide documentation proving
otherwise -- either way, the blemish on your credit report must be removed.
Of course, you can use this loophole to your advantage even if the
information is accurate. If you have reason to believe that your creditor
does not keep good records, simply tell the credit-reporting agency that you
believe the negative information to be inaccurate, and then the onus will be on
the creditor to prove that you ever owed the money. Some people find this
practice to be unethical, but others just think of the unethical methods used by
creditors and consider this to be fighting fire with fire.
A slight variation on this strategy is to approach the creditor directly. For
example, if you have an unpaid debt of $1,000 on your credit report, you may be
able to go to the creditor and say, "I'm sorry about letting this debt
accumulate, but now it is really damaging my credit score. Let's work this out
between us. If I give you $1,000 right here and now, will you tell the
credit-reporting agency that this was all a misunderstanding?" Your creditor may
even be willing to settle for less than the total amount owed. However, be aware
that credit card companies are much less likely to do this. It's not because
they're hard to deal with, (they can actually be quite accommodating if you only
ask), it's that they sell their debts to debt-collection companies rather
quickly, and once this happens, the credit-card no longer has a claim on the
debt, and the debt collector cannot say, "It was all a misunderstanding" -- your
credit report already reflects that the debt was sold to a third party.
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