Can the Credit Bureau Take a Collection Item Off Although the Company Says No?

Your credit history is a crucial factor in determining whether you qualify for loans, lines of credit, insurance, housing and even employment. Collection accounts lower your credit score and make it more challenging to get applications approved. Unfortunately, collection agencies don't often voluntarily remove collection accounts from credit reports. A credit bureau, however, has the power to do so.

Facts

• The three major credit bureaus, TransUnion, Equifax and Experian, have the responsibility of maintaining accurate credit histories for every consumer with a credit report. Each credit bureau has the ability to alter its credit files independently of input from any third party. Thus, if a credit bureau determines that a collection account contained within your credit report is inaccurate, it can remove the account regardless of whether the collection agency insists that the account remain.

Significance

• When you dispute an account with the credit bureaus, either online, by phone or by mail, the Fair Credit Reporting Act requires the credit bureaus to investigate the accuracy of the dispute. Due to the large volume of disputes each credit bureau receives, investigations typically consist of the credit bureaus sending the information furnisher a fax inquiring as to whether the reported information is valid. If the information furnisher does not respond within 30 days, or responds that the information is inaccurate, the credit bureau will then remove the account from your credit record.

Disadvantages

• Because the credit bureaus contact information furnishers before removing disputed accounts, a collection agency that does not want its account removed must simply notify the credit bureau that its report is, in fact, accurate. Regardless of the information you provide to the contrary, the information furnisher's response carries significant weight in the investigation process. Thus, a credit bureau has the ability to remove collection accounts if the collection agency refuses to do so, but is unlikely to disregard the collection agency's assertion of the debt's accuracy.

Time Frame

• If the reporting period for a collection debt has expired, the credit bureau must remove it. The Fair Credit Reporting Act sets the reporting period for collection accounts at seven years from the date the original debt fell into default. If you notify the credit bureaus of a collection account that appears on your report beyond the legal reporting period, the credit bureau can remove it without first consulting with the collection agency.

Warning

• If a credit bureau investigates a disputed item on your credit report and refuses to remove it, disputing the item a second time for the same reason will hurt you more than help you. Each credit bureau maintains a record of your credit disputes. The credit bureaus reserve the right to mark repeated disputes "frivolous" and refuse to re-investigate. You do, however, have the right to add a 100-word consumer statement to your credit report explaining the presence of the collection account.