The Federal Trade Commission is a federal bureau that protects the consumer from fraudulent or unfair business practices prohibited under the Fair Credit Reporting Act. The act also outlines your rights as a consumer to initiate an investigation into a negative report on your credit report if you feel the report is in error. You have the right to demand the item be removed unless the credit reporting agency can prove its accuracy. The reporting agency has a reasonable time frame--usually 30 days--to verify the information or remove it from your credit report.

Dispute Negative Information

Obtain a free copy of your most recent credit report. Each credit reporting agency is required to provide the consumer with a free report every 12 months. You can use agencies such as the Free Credit Report website to obtain a copy. Most credit report sites have a simple form you can fill out to dispute negative information. The burden of proof is on the creditor, not the consumer; if the agency cannot verify the information in time, the negative report will be deleted from your credit report. If the negative item is accurate, it will remain on your credit report, but it might be worth your time to attempt a dispute just in case the creditor has lost the record, cannot find it in time or loses the dispute request and thus does not verify it. If you have not had a response to your initial request by the deadline, send a certified return receipt mail of the same letter, demanding your negative report be removed immediately.

Negotiate with Creditors

Write to the creditors and collection agencies to whom you owe money. Explain why the bill wasn't paid, emphasizing any legitimate hardship or circumstance that justifies nonpayment. Offer to pay a negotiated percentage of the money owed in return for the creditor changing the negative rating on your account to "paid as agreed" or some other positive rating. Get the agreement in writing. Pay off the agreed upon amount and make sure it is reflected on your credit report as agreed.

If All Else Fails

If you have disputed the negative reports and the creditors have verified it as yours, you can write to the creditor and demand written proof that the account is yours. Send your letter via certified return receipt mail. Most creditors discard the written proof to store computerized information; this makes many companies unable to provide a copy of the original contract you made with them. If you have not heard back from the creditor seven days after you believe the creditors received your letter, it usually means the creditor cannot provide this proof. At this point, it's time to involve the attorney general of your state.

Involve the Attorney General

Write the attorney general's office in the state where the creditor is located. Explain that this creditor has affected your credit rating negatively without proof and demand attention to the matter. The attorney general's office will contact the credit company and verify that there is no existing proof. The attorney general's office will then ensure that the negative item is removed from your credit report.

Debt Consolidation Companies

Hiring a debt consolidation or debt counseling company to take the above steps for you is another option. These companies will approach all the creditors for you and take the same steps to either renegotiate debts or get the negative items erased from your credit report. Hire with due diligence and care; many debt consolidation companies will charge you high fees but make no improvements on your credit report.

Warning

If a creditor can prove that the bad item is accurate, the only way to remove it will be after the required number of years have passed. For instance, a bankruptcy will remain on your credit report for seven years (Chapter 13) to 10 years (Chapter 7).

Source:

Federal Trade Commission: Credit Repair

Planet Loan: Credit Repair

Experian: Credit Disputes

Resource:

FreeCreditReport

Annual Credit Report

How to Remove Negative Credit Items