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If you are able to settle your debt, make sure you get in writing the lender’s promise to have the item removed from your credit reports. Don’t rely on verbal promises. Get a letter or email detailing how much you have agreed to pay and the item will be deleted from your credit file.
Review your credit report for mistakes
Another important reason to get your credit report is that it could contain mistakes that are dragging down your credit score. When you review your reports look for charge offs, judgments, liens, accounts that have gone to collection, etc. If you find some, make sure they’re really yours. The credit bureaus process thousands of items a week and they can make errors.
How to dispute an error
Let’s say you review your report and find a debt charged off that wasn’t yours. Maybe it was someone else’s that got in your credit file by mistake. In any case, you can dispute the item. All three credit bureaus have forms online where you can file a dispute. Warning – you can’t just say, “Hey, that debt wasn’t mine.” You need to have documentation supporting your claim. If you do have adequate documentation, the credit bureau must contact the company that reported the item and request validation – or proof that the item was not an error. In the event the company cannot validate the item or just doesn’t respond within 30 days, the credit bureau must by law remove the item from your report.
Check out this video for more details on disputing errors in your credit report.
Other things you could do to boost your credit score
If you have a debt that’s gone to collection, you most likely know about this because the collection agency has probably contacted you at least once. If so, you may be able to also negotiate with it to have the item removed from your credit file. The collection agency purchased your debt from your lender and for much less than you really owe. This leaves room for negotiation so you might be able to settle the debt for 40% or less with the stipulation that, in return, the collection agency amends your credit report to read paid in full.