I recently paid a settlement on a delinquent account. I have the release letters and was told I could send them in directly to have the information removed from my credit report. Can you tell me how to do this?
- KJF
Dear KJF,
The lender you settled with should notify Experian and the other major credit bureaus (TransUnion and Equifax) of the change in your account status, and your credit reports should reflect the update soon after. If that doesn't happen within a month or two, or if you'd like to expedite the update, you can file a dispute with each credit bureau, and furnish them with copies of the release letters you mentioned.
It's important to note, however, that settling a delinquent account will not hasten the removal of the account from your credit report.
How Long Do Settled Accounts Stay on a Credit Report?
Settling an account will cause the status to show that you no longer owe the debt, but the account will stay on your credit report for seven years from the original delinquency date. The original delinquency date is the date of the first late payment that led to the account being considered delinquent or defaulting.
A settled account is considered a negative entry on your credit report since it indicates the lender agreed to accept less than the full amount owed. A settled account on your credit report tends to lower your credit scores, but its effect will lessen over time.
How to Dispute a Settled Account
If the status of your account is not properly updated to reflect the settlement, you can dispute your credit report to correct the inaccuracy.
Experian and the other national credit bureaus accept dispute requests online, by phone or by mail. Using Experian's online Dispute Center is the quickest, easiest way to dispute information on your Experian credit report you believe to be incorrect. The other credit bureaus have similar dispute processes of their own. You may want to provide documentation that backs up your claim to help expedite it.
If the lender determines the information was incorrectly reported, they will notify the bureau to either update the information to correct it or remove it from your report entirely. Disputing accurate information won't cause it to be removed from your credit report, even if it's negatively affecting your scores.
Credit report disputes are typically concluded within a few weeks. It's smart to check your credit reports and credit scores three to six months before you seek a major loan so there's time to make changes to an account or resolve any disputes with a lender before you submit your application.