August 5 Money Blog – Negotiating Tips To Get Negative Remarks Removed From Your Credit File

Q: Hello. I've read your book Zero Debt and have been doing well since January. I have some extra money and want to settle an old debt with Capital One that I haven’t paid on since January 2002. My balance as of right now is $1241.85. My question is: do I send a settlement letter like you suggested to Capital One, or do I do this with the Van Ru Credit Corporation (who sent me a settlement offer in the mail for $683.02)? Also: 1. When I'm on the phone with whichever company I call, do I speak to a supervisor right off the bat? 2. How do I go about requesting that they delete all the negative information from my credit report? 3. And if they argue that, what do I do? 4. Will this delete the negative information they've added right from the beginning, from 2002, or just recent negative marks? I have settled two cards in the past, but I didn't ask for anything to be removed from my credit report, and I didn't get the offer in writing. I'd like to do it the right way this time. Anything you can advise me on would be greatly appreciated! A: Thanks for reading Zero Debt and for taking the time to write me. It sounds like your Capital One account has already been turned over to a collection agency, so you’re probably ultimately going to have to deal with Van Ru Credit, not Capital One. Remember that negative information can legally stay on your credit report for 7 years, meaning that the ‘adverse’ listings from 2002 could stay on your credit report until 2009. However, that doesn’t HAVE to be the case. Your best bet is usually to try to call up the original creditor and make a direct appeal to request a settlement and ask that they remove the negative notation(s) from your credit file. Capital One might have LESS incentive to do it for you now because they’ve likely “written off” your debt when they turned it over to collections. Nevertheless, sometimes it works to ask the creditor for a settlement. The worse that can happen is that they say “No” and refer you to Van Ru. If so, here’s what to do: 1) Call up the collections agency and let them know who you are (if you’re still a customer, state that … but even if you paid off & closed the account, don’t worry about it; just indicate that you’re a former client) 2) Tell the rep that you would like to talk to someone about the credit information that the company is reporting to the credit bureaus – and that you need to talk to someone who would have the authority to update/change the info reported in your credit file 3) Explain to the person you speak with that, while you had late payments in the past, you are prepared to settle now by making a lump sum payment in lieu of full payment. Make sure you mention that you were younger, experienced a divorce, were out of work at the time (or whatever honestly explains your past predicament and why you weren’t able to pay). 4) State that you are earnestly trying to re-establish your credit and that it would be tremendously helpful if they would consider removing the “bad” mark from your credit 5) Reveal any (truthful) information that might work in your favor (such as it was your first time getting behind on bills, that you went through a downsizing, moved to a new home/state … whatever applies for your situation. After you make your request, if the first person says “No,” don’t be afraid to wait a couple days and call back and see if you get a more cooperative person on the phone. Often, persistence pays off with these things. If they agree to remove the negative info, try to see if you can get them to DELETE the adverse listing altogether. Short of that, ask that they change/update your account status to “PAID.” Make sure they don’t put “PAID WAS CHARGED OFF,” or something like that. That won’t help your FICO score or your credit standing in the eyes of lenders. You don’t need to ask for a supervisor right away – only if the phone rep you deal with is unreasonable/inflexible or won’t give you anything you ask for. You should definitely request that they delete all negative marks beginning from 2002, not just recent stuff. Push to get a letter of agreement in writing before you settle. It’s so common for bill collectors to say “we don’t do that”, then you press them and they will. That’s when you might ask to speak to a supervisor. Try to get this person to write that letter (or to authorize it to be sent to you). Alternatively, ask if you can send (via fax) a letter of agreement that you write up and they simply sign … but try to get something in black and white as your protection. You have to get your agreement in writing in case they renege on the deal and don’t delete your negative info even after you’ve paid. If you take the offer to settle for $683.02, at the very least they should update your account to reflect that it’s been paid. Well, I hope this helps. Good luck to you! Best, Lynnette http://www.themoneycoach.net Lynnette Khalfani is the author of the New York Times bestseller Zero Debt: The Ultimate Guide to Financial Freedom