Credit Reports: What They Are, How To Get One, How To Fix It

If you want a change an entry for a very delinquent account or one that has been charged off as a bad debt account, you'll have to negotiate a settlement with the creditor, which you may be able to do for pennies on the dollar.

Step 1. Think about whether you are a good person to negotiate with the credit card company, or whether you have a friend who is better at it who is willing to make the call for you.

Step 2. Contact the original creditor to find out where the account is located. You may be transferred to an in-house collection department or be referred to an outside collection agency. The account may even be in the hands of a third party if the original creditor "sold off" delinquent loans.

Step 3. Either you or your negotiator are ready to negotiate a settlement. Especially if the loan is held by a third party and not the original creditor, a creditor is likely to settle for much less than the original amount. Some money is better than none at all. Plus, third parties generally only pay pennies on the dollar when they buy a delinquent account.

Don't be shy about mentioning your health condition and the economic hardship it has caused you.

If possible, offer a lump sum payment. You can start with a low-ball offer of pennies on the dollar -- 10% of the debt or even less. Expect that the creditor will try to get you to agree to pay the entire amount. As you negotiate a settlement, remind the person of the expenses involved in treating your medical condition plus your normal essential expenses that you have no choice about. If you are over your head in debt, the threat of bankruptcy can also be an effective inducement for a creditor to agree to a lower payment. Before you pay any amount, get in writing a promise of removal of the negative information in exchange for your payment.

If you can't afford a lump sum payment, offer a payment plan in which you agree to make monthly payments until the account is paid. Your negotiating position isn't as strong as if you agree to a lump sum payment. However, from the creditor's point of view it's a cost free way to get at least some money -- which is better than spending money to go after you and possibly get no money. Let the creditor know you're only willing to agree to this arrangement if the creditor agrees to remove any negative statements from your credit report upon completion of the payments. Get the promise of removal of negative information in writing in return for your agreement to make payments.

Note: In most cases, credit bureaus may not report negative information that is more than seven years old, or bankruptcies that are more than ten years old.

Please share how this information is useful to you. 0 Comments