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Q&A: Can I Fix Old Unpaid Or Charged Off Accounts On My Credit Report?

Is it possible to fix old negative accounts on your credit score? Maybe.Q. I recently checked my credit reports and learned that they were reporting an old credit card as unpaid. Years ago, this account was charged of and had gone into collections. I eventually paid it off.

I disputed this information with the credit bureaus. Transunion updated this item to “closed and paid” but Experian informed me that this account will never be updated because it was transferred to collections. (The collections account does not appear on my Experian report.) She also said that it’s actually better to have the old unpaid account than a collections account. Is this true? Is there anything I can do about this old negative account on my credit report? — Lynn

A. It may not seem fair that past financial mistakes continue to haunt us years later, but that’s what credit reports do. While the most important thing you can do to repair damaged credit yourself is to make every payment on time and avoid too much debt going forward, sometimes there are steps you can take to dispute the way old unpaid or charged off accounts appear on your credit reports.

Check your credit report and dispute errors

You were correct to contact the credit bureaus to dispute the information. This is the first step anybody should take after you check your credit and find something questionable.

In your specific example, I’m unable to find any laws that suggest Experian has to report the old account as paid. Different credit bureaus may report things differently. When an account goes to collections, the creditor usually sells your debt to the collections agency. Even if you then pay the collections agency and the debt is settled, from the original creditor’s perspective, that account was never paid.

The representative at Experian was right about one thing: It’s a good thing the collections account does not appear on your Experian report; any collections activity on your credit report is a derogatory item that will have a large negative impact on your credit score.

If you have not already done so, you can ask Experian to put a comment in your credit report that indicates you paid the old account through a collections agency. This information won’t change your credit score, but if somebody looks at the report and wonders about the discrepancy, they will see this explanation.

Finally, you can try contacting the creditor itself. If you’re polite and find a sympathetic phone rep, they might help explain how the account is being reported and what, if anything, you can do about it.

Wait for negative accounts to expire

The good news is that negative accounts on your credit report don’t stay there forever. The Fair Credit Reporting Act mandates states that:

[N]o consumer reporting agency may make any consumer report containing…
[a]ccounts placed for collection or charged to profit and loss which antedate the report by more than seven years…

…The 7-year period referred to in paragraphs (4) and (6) of subsection (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.

In plain English, a late or unpaid account can only be reported on your credit report for seven years and 180 days from the day you missed a payment. This also covers collection accounts. So if you stop paying a credit card and it goes into collections, the collections account can only remain on your credit report for seven years and 180 days from the date you missed the credit card payment (not when it was transferred to collections).

This is the law, but creditors and collections agencies frequently skirt the law. So if you have old negative accounts that are still appearing on your credit score when they shouldn’t, it may pay off to do some digging and see if some are being illegally reported.

Know the limits of ‘credit repair’

There’s a big, shady industry out there selling programs for $90 a month or more that will “repair” your credit. All they do is what we just talked about:

  • Provide tools to ensure you pay your bills on time
  • Dispute old accounts with the credit bureaus and creditors

Save your money. In some extreme cases, incorrect information on your report may warrant getting legal help, but this is rare. If you have a checkered credit history, you can contest old accounts that don’t look quite right on your report, but the most important thing is to do your best to reverse the trend by being responsible with your present-day payments and debt use.

What about you? Have you successfully handled discrepancies on your credit report? Had negative accounts removed? How did you do it?

Published or updated on August 27, 2012

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


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  1. Jon says:

    A clear discussion on how to handle those accounts which are mark unpaid but already paid accounts. This article will guide your followers or subscribers on how to handle it. If payments was already been made then provide all the proof that was paid. It does not mean that if the account is still mark as unpaid there will be ways or solutions that will be solve. As what the author has contributed in his article. Thank you for sharing.

  2. I had a negative mark on my credit score once. There was a miscommunication in college about who was paying a medical bill. I was completely unaware of it at the time, but things worked out. Just call and be honest.

  3. A couple of things here; for the most part the article gives good advice. Where I would disagree is the part about leaving a comment. Under any circumstances should you ever leave a comment and here’s why; first, having been in the lending and credit industries for over 20+ years, no one reads them. They are looking at your credit score. If they fit the underwriting guidelines, then you qualify, if you don’t – you don’t. Additionally, if you haven’t really audited that items on your report but do at a later date and the bureau finds that it is in fact in error, inaccurate, or maybe even obsolete and you gave that statement, you might get a deletion of that account but the statement would remain. Nothing to be gained here.

    What I don’t understand is when you say Experian informed me that this account will never be updated because it was transferred to collections. First, what was the actual dispute? Did you say the account was inaccurate, were the account numbers being reported correctly, and was it even your account? In any case, the only answer you should have gotten from them is that the account was verified as reported which is what I imagine you received. At that point, in that letter, they would have provided you with the collectors contact info. I would have then fired off a letter to them asking to validate the debt pursuant to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 (b) that your claim is disputed and validation is requested. By law, they would have to provide you with the following:
    • What the money you say I owe is for;
    • Explain and show me how you calculated what you say I owe;
    • Provide me with copies of any papers that show I agreed to pay what you say I owe;
    • Provide a verification or copy of any judgment if applicable;
    • Identify the original creditor;
    • Prove the Statute of Limitations has not expired on this account;
    • Show me that you are licensed to collect in my state; and
    • Provide me with your license numbers and Registered Agent.
    If they cannot provide you with this information within 30 days of your return receipt, then by law they must inform the bureaus that the debt is not verified and send you a copy of the deletion request.
    If you do not receive a letter within 45 days, I would sent a new dispute to the bureau providing a copy of the debt validation sent to the collector, a copy of the return receipt, and the fact that they did not respond and so this item must be deleted from my credit report.
    If you were to get something factual from them that did, in fact ,demonstrate the debt as your and the fact that it was paid, I would send them a letter to correctly report the item to the credit bureau and send you a copy. I would check my report in about 45 to 60 days to see if in fact, it was corrected. If it was not, and you received a copy of the corrected reporting, I would use that letter and re-dispute with the bureau.
    The moral of the story here is there are no tricks and no such thing as beating the credit bureaus. There is a set of consumer protection statutes that we all, as Amateur Consumers, must learn in order to become the best guardian of our own economic reputation, and learn to manage our credit like a resume. Hope this helps :)

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