Your credit report shows your entire credit history: the good and the bad. When young couples experience money problems, late payments and collection accounts, their credit scores suffer. The quickest way to improve your credit score is to have these negative accounts removed from your credit report. The exact impact on your credit score is difficult to quantify. It depends on the number of negative accounts, the age of the accounts in question and the rest of your credit report. Expect a modest credit score increase when removing negative accounts.
Time & Your Credit Report
Your score drops when an adverse credit entry hits your credit report. As time passes, the impact of a negative account on your credit score lessens. Establishing good credit history after a negative account increases your credit score, but that one entry still affects your score in some small measure. You'll notice the biggest increase by removing recent collection accounts from your reports. Recent adverse accounts affect your score the most.
Pay for Deletes
Paying for deletion is the best way to remove a collection account. Simply paying a collection does not help your credit score -- it only marks it as paid. Always negotiate with the agency that owns the debt. Get a letter in writing from the agency that it will remove the entry from your credit report within 30 days of payment. Once you have that letter in your hand, pay the debt. The collection agency will remove the entry when it has the money. If it doesn't, dispute the entry with the credit reporting agency using the letter as proof. The credit bureau has 30 days to investigate a credit report dispute and furnish its results. When it is removed, the bureau will give you a new copy of your credit report. You'll need to repurchase your credit score to evaluate the increase in your credit score.
Negative accounts stay on your credit report for seven years from the date of entry. Judgments and bankruptcies stay on your report for 10 years. When the statute of limitations passes, the entry ages off your report and your credit score may experience a mild increase. As stated earlier, entries affect your score less the older they are. A mild increase is experienced when using this tactic to remove negative entries. It is important to note that just because an account ages off your report does not mean you no longer owe the debt. Your state's statute of limitations on debt determines how long creditors can come after you for debts.
Inaccurate information often gets placed on credit reports. When an agency places an inaccurate collection on your report, you maintain the right to dispute the entry for inaccuracy. The collection agency must furnish proof that you owe the debt. When you submit a dispute, the collection agency has 30 days to verify the accuracy of the entry. If the collection agency does not validate the debt, it is removed and your score improves.
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