Your credit score has been declining, and after some research, it seems that a settled or closed account from months ago is having an impact on it.
Settled accounts can appear and affect your credit score and report for up to 7 years.
Continue reading to find out more about settled accounts, how to remove settled accounts from credit reports, and what steps you can take to have them removed from your report.
Settled accounts can be a major headache when it comes to your credit score. They can drag it down for years, even if you’ve paid off the debt But don’t worry, there are ways to get them removed from your credit report. In this guide, we’ll walk you through the process step-by-step, using information from MoneyLion and Alleviate Financial Solutions.
What are settled accounts?
A settled account is a debt that you’ve paid off for less than the full amount you owed. This could be due to a debt settlement program, negotiation with the creditor, or simply not being able to afford to pay the full amount. While settling a debt can be a good way to get out of debt, it can also have a negative impact on your credit score.
How do settled accounts affect my credit score?
Usually, settled accounts are recorded as “charged off” or “paid in full” with credit bureaus. Even though you’ve officially paid off the debt, both of these notations could lower your credit score. This is because it indicates that you were unable to pay your entire debt, which puts lenders at risk.
How to remove settled accounts from your credit report
There are a few different ways to remove settled accounts from your credit report. Here are the most common methods:
- Dispute the account with the credit bureaus. You can dispute any inaccurate information on your credit report, including settled accounts. If you can prove that the information is inaccurate, the credit bureau will be required to remove it from your report.
- Send a goodwill letter to the creditor. A goodwill letter is a letter that you send to the creditor asking them to remove the settled account from your credit report. This is typically done if you have a good payment history with the creditor and you have a legitimate reason for not being able to pay the full amount you owed.
- Wait for the settled account to fall off your credit report. Settled accounts typically stay on your credit report for seven years from the date of the first missed payment. After seven years, the account will automatically fall off your credit report.
Which method is right for you?
The best method for removing a settled account from your credit report will depend on your individual circumstances. If you have a good payment history with the creditor and you have a legitimate reason for not being able to pay the full amount you owed, sending a goodwill letter may be the best option. However, if you have a poor payment history or you don’t have a good reason for not being able to pay the full amount you owed, disputing the account with the credit bureaus may be a better option.
Tips for removing settled accounts from your credit report
Here are a few tips for removing settled accounts from your credit report:
- Be patient. It can take time to remove settled accounts from your credit report. Don’t get discouraged if you don’t see results immediately.
- Be persistent. If you’re not successful in removing a settled account from your credit report the first time, don’t give up. Try again with a different method.
- Get help from a credit repair specialist. If you’re struggling to remove settled accounts from your credit report on your own, you can get help from a credit repair specialist.
While deleting settled accounts from your credit report may not always be easy, it is still feasible. By heeding the advice in this manual, you can raise your prospects of success. Recall that you can raise your credit score and reach your financial objectives more quickly if you get started on the process as soon as possible.
Send a Goodwill Letter to the Lender
You can write a goodwill letter to the lender directly if you don’t think that approaching a credit bureau directly is the best course of action.
Sending a courteous letter to a lender can request that they take the settled account off of your credit record.
This is not a dispute because you are not claiming any errors and are simply requesting that the settled account be deleted.
For those who missed payments on a loan because of illnesses or personal injuries, sending a goodwill letter is the best option.
Remember that creditors will review your account history to determine whether you attempted to make amends following any of these events.
They may use this information to make a decision on your account.
At this point, you can offer to make the full payment or try to find a middle ground.
With the lender by settling on an amount that is less than what’s owed.
The lender ought to delete the account from your credit report once you’ve managed to pay them back in full or in part.
Remember that although the account will no longer have any negative consequences because it has been deemed paid, your account’s payment history will remain visible.
Review Your Debt Settlement Options
To raise your credit score, it’s critical to think about the various methods for paying off debt and repairing your credit.
Credit bureaus aren’t allowed to report inaccurate or incomplete information. You have the right to contest the accuracy of any information that appears to be erroneous or incomplete on your credit report. Credit bureaus have 30 to 45 days after receiving a challenge to look into, validate,and/or update the data they have on file about you.
If the collection item or debt in question on your credit report isn’t yours, you shouldn’t pay it. Ask the credit bureau to remove it from your credit report using a dispute letter. You have the right to contest a debt and ask for its removal from your credit report if a collector has kept it there for more than seven years. This is especially true if you have proof of the start of the delinquency.
You might be able to request the removal of the negative mark as a favor or an act of “goodwill” from the original creditor or collection agency if you have a stellar credit history. You’ll generally have to pay the collection account off first, though, if you haven’t already done so.
Go ahead and request a goodwill deletion from the financial institution if your credit history is otherwise spotless. Removal following payment may be prohibited by their policies, but goodwill deletions may not be, so it never hurts to inquire. You can find goodwill letter templates online to help you communicate with your lender.
There are other options to consider for debt settlement though.
CH Q&A “Is There a Solution to Removing Settled Debt from my Credit Report?”
FAQ
Can a settled debt be removed from credit report?
Can a paid debt be removed from credit report?
How long does settled debt stay on credit?
How do I get collections removed without paying?
Can I remove a settled account from my credit report?
Unless the information reported to the credit bureaus is incorrect, you won’t be able to remove the settled account from your credit report. You can try to negotiate with the creditor, but legally the debt can stay on your credit report, regardless of payment status.
How do I settle a debt on my credit report?
There are other options to consider for debt settlement though. The first step to closing a settled account on your credit report is to dispute it. You must study the loan or account closely and see if there is any inaccurate information. If there is, then you can dispute inaccurate information.
How do I remove a settled student loan from my credit report?
It can be challenging to remove settled loans and credit card debt from your credit history, particularly without clear direction. There are a few steps you should take that will make the process of fixing your credit easier. The first things to do when trying to remove a settled student loan from your credit report are: Get your free credit report
Does settling a debt automatically delete a credit report?
When settling an old debt, many people assume that it’ll automatically be deleted from their credit report, but this is typically not the case. The account still gets reported — despite your settlement payment — unless you have a specific agreement with the creditor to delete the account. Even without this agreement, you still have some options.