How to Negotiate With Creditors and Clean Up a Credit Report

Getting into debt is easy. Climbing out of debt is the challenging part. It is possible to negotiate with creditors on your own to settle debt and clean up your credit report. You might be surprised how willing creditors are to negotiate when you tell them you want to pay off your debt. It may take some time, but paying off debt will gradually improve your credit score.

Instructions

1

Check your credit. If you have recently been denied credit based on the information in your credit report, you can request a copy from the bureau the creditor used. You are entitled to a free copy of your report every year from Equifax, Experian and TransUnion, the three major credit reporting bureaus. Obtain it by visiting annualcreditreport.com. Review account balances to ensure data is reported accurately. Use the information in your report to obtain the names of the creditors.

2

Dispute discrepancies or outdated accounts. If you see any errors on your report, contact the credit bureau to correct the information. The bureau will launch an investigation to verify whether or not the creditor is reporting accurate information.

3

Contact the creditors. If your debt is recent, you can call the original creditor to discuss bringing the account current. For older debt, you might need to contact the collection agency. When a creditor is unsuccessful at collecting money owed, they charge off the debt and sell it to a third-party collection agency.

4

Ask the creditor to remove fees or request a lower rate. Briefly explain the circumstances and why you fell behind on the debt. Your creditor might be willing to eliminate the late fees or offer you a lower rate to help bring you current. If the debt was sold to a collection agency, the original already sold the debt for as low as pennies on the dollar. Collection agencies are often satisfied with collecting just a percentage of the account balance.

5

Request a written agreement before agreeing to pay. Creditors are not required to erase negative account information from your credit report. Although the creditor is required to report the debt as paid, it still might remain on your report as a delinquent account that was settled. It is best to have the creditor delete the information entirely. If the debt is old, use the age to your advantage. After seven years, negative debt falls off your report. Creditors are aware there is a slim chance of collecting debt on an account that is approaching the statute of limitations. Even if your creditor is unwilling to delete the information, a paid account will improve your credit score.