Credit Reporting Issue

A debtor comes in my office and asked me to take a paid in full account off of their credit report. I was always under the impression that we were responsible for making sure that credit grantors had an accurate depiction of the person’s credit. Is it against the law to remove an account from the debtor’s credit report if it was an accurate and valid debt?

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Comment by Wayne Gooch on June 8, 2011 at 9:25am: No it isn't against the law, but there is no reason to remove it, just for the sake of removing it. The customer is obviously trying to get a loan or purchase something and wants a higher credit score. Showing it paid the debt will remain on his record and in most states 7 years.

Comment by Jack Gordon on June 8, 2011 at 9:32am: It is not against the law, but it may well be a violation of your contract with the credit bureaus. The only time it is safe to tamper with a reported item is when there is an actual problem with the accuracy of the reported item. In those cases, you have an obligation o take corrective action, up to and including removal.

In all other cases, including consumer requests, tread carefully.

Comment by Frank Christenberry on June 8, 2011 at 9:38am: I understand, and thank you, but agencies are doing it. People are removing if they agree to pay the accounts in full, using it as a bargaining tool instead of a negative reaction to their delinquencies. The FTC says we should never remove anything ever unless it was an error or identity theft or a dispute that was valid.

Comment by Shawn Yates on June 8, 2011 at 10:27am: I have managed the contracts for the agency I worked at and they specifically state not to remove an account from the bureau unless it was placed in error or you the furnisher run the risk of losing your ability to report accounts at all. I would be very careful in doing this. I can promise you the bureaus watch your percentage of deletes and will ask this question if it gets above normal levels.

Comment by Betty on June 8, 2011 at 10:30am: That's very true, Frank. People are doing it. I actually worked for an agency not too long ago that used removal as a negotiating tool and it did work, sometimes. I was always under the impression that the only way it could be removed was if it was placed on the report erroneously. They would lead the consumer to say they didn't know the account had been placed with an agency and therefore remove it if the debtor paid TODAY. A fine gray line, that I do believe they were crossing.

Comment by Albert Cowan on June 8, 2011 at 1:06pm: The caveat here is that paid/settled in full claims usually affect a person's credit to a greater degree than if they filed bankruptcy. The FTC, scoring agencies, credit bureau companies, and us are all remiss in not allowing more leeway to our industries in removing paid/settled in full claims. We are/were currently in another deep recession and not allowing honorable people to pay and fully recover to reenter the credit system is a severe problem. We all are currently cutting our noses off to spite our faces by limiting consumers and businesses from fully recovering prior to the expiration of the seven year statute of limitations. We are limiting our future business and slowing down the recovery.

Comment by Frank Christenberry on June 8, 2011 at 1:18pm: I really think it shouldn't be our choice. Regardless of our personal beleifs. If we are to get our country back on track, it will need lending to responsible people. If the credit reports are not right then defaults away. I would rather it be as Jack said, a contractual issue. Settled in full is alot worse of the two.

Comment by Albert Cowan on June 8, 2011 at 1:30pm: Whose choice should it be if not ours collectively? I mean all the agencies I listed above are the decision makers and policy setters not just solely any one party or our government regulators - they take their lead and information from us. What do we want to encourage? In my opinion, we want to encourage people to privately put their money toward resolving debt, while still allowing recovery through bankruptcy. Putting capital back into the system trumps a government write-off through taxes and trumps the government supplying the stimulus, right? We could all choose to allow a hybrid system... say we allow settled claims to be removed and scored appropriately at three years following payment and removed at one year following payment in full. Would this not work better than adversely affecting individuals who actually pay for the full seven years? If we choose this path or a similar path we will need to encourage regulatory, reporting, and bureau agencies to all get on board to change our current systems. It makes little sense to me to allow bankruptcies to recover more quickly than people who wish to personally honor their contracts through payment. And less sense for companies to take tax loss write-offs over actual revenue coming into our companies.

Comment by Albert Cowan on June 8, 2011 at 1:31pm: I'm all ears... brainstorm with pros and cons and other ideas or arguments for the current system, please.