How to Repair Credit after Credit Card Lawsuit

The goal of this article is to provide concise answers to some basic credit repair questions, and provide strategies to legally repair your credit score after late credit card payments, and/or judgments have negatively impacted your credit score.

Entering the term ‘credit repair’ into Google yields over 240 million search results. As you probably know, there is no shortage of information or misinformation on this subject the Internet. We specifically put together this information at the request of many of our visitors who have written us frustrated with finding easy-to-follow credit repair strategies after a credit card lawsuit.

We will first answer some of the most common questions posed by consumers recovering from negative credit situations, and move on to proven credit repair tips and strategies.


Credit Questions & Answers

Q: Can I clear my late payment history by paying off my credit cards?

Unfortunately, your history will remain on your report for some time. Anyone looking at your report will see that your accounts are up to date and paid, but that they were paid late. Paying off your credit cards is still useful and a great way to start repairing the damage.


Q: I owe less than $5000. Why is my credit score lower than people who owe much more?

The reality is, your credit score is not based on the amount you owe but rather how you repay the debt. Late and missing payments have a significant effect on your score. Collection suits for defaulted accounts have even more of a negative effect as you would expect. A person may have $20,000 but they pay on time, every month and their debt isn’t rising as a result. Someone who has $500 debt but misses payments regularly can expect their credit score to plummet.


Q: I’m applying for a mortgage with my wife. Her credit is good but mine is not. Will this affect our application?

When applying for any kind of joint account, lenders analyze the credit scores of both parties. Your application may be at risk if one of you has a low credit score. If you have been pre-approved, you may end up paying a much higher interest rate.

Most mortgage lenders actually use a mortgage reporting company that merges all of the credit histories into one. These reporting companies include information not only on your direct credit history but also your employment history, savings and investments, whether you have owned a property before and how many times you have moved. You can contact mortgage reporting companies to request their report before you submit a mortgage application. This may give you a better idea of where you stand and how your credit scores may affect the application.


Q: My ex-wife is filing for bankruptcy. Will this affect my credit score?

Not necessary. Her bankruptcy will not show on your credit report. Any debt she has incurred since the divorce will remain her own unless co-signed by another party.

However, the situation gets a little more complicated if debts were accrued while you were still married. Although these debts on her part will be discharged by the bankruptcy, the lender may still look to you for payment. If you find yourself in this position, it may be a good idea to seek the advice of an attorney experienced in these kinds of complicated cases.


Q: After a serious accident I’m going to be left with large medical bills. The hospital will not accept a monthly payment plan. I’m still not sure how I’m going to pay them. I’ve heard that medical bills don’t show up on credit reports. Is that true?

Unfortunately not. Credit reporting agencies wait 180 days before adding medical debt to your credit report. That gives you time to receive the complete bill and arrange payment. If payment isn’t made after that point, the hospital will likely hand over your account to collection and this will show up on your credit report.

Collections are to be avoided at all cost in order to protect your credit score as they can be very damaging. At this point, medical collections are just the same as any other collection account.

Instead of letting it go to collection which will have a negative impact on your credit, why not consider a small loan to cover the costs which can be paid off steadily each month.


Q: My credit score is very low. Will I ever be given credit again?

Your credit can definitely be built up over time. Negative items will eventually be removed once the accounts have been closed and no further negative history has been added.

Therefore, the key to clearing your credit is to arrange your finances so no new negative items are added to your credit report. If you can keep up with payments from now on, not let anything go to collection and pay bills on time, your credit score will gradually improve and you will have a greater chance at getting credit.


Credit Repair Strategies

STEP 1: Order your free credit report

Federal law allows consumers to receive a free copy of their credit report once a year. You can request this directly from one of the three main credit reporting agencies: Experian, Equifax, and TransUnion or by going through www.annualcreditreport.com.

Alternatively, you can contact the reporting agencies over the phone at the numbers below:

  • EQUIFAX: 1-800-685-1111
  • EXPERIAN: 1-888-397-3742
  • TRANSUNION:1-866-887-2673

You may also call the Central Distribution Number at 1-877-322-8228 to get all three reports.


STEP 2: Carefully read and analyse your report.

Examine your report thoroughly in order to check for inaccuracies and errors.

Each reporting agency differs in the way they present the information but all three will include details regarding:

  • Personal information (full name, address, employment, social security number etc.)
  • Account details and status (types of accounts held, credit limits, paid or past due etc.)
  • Public records (e.g. bankruptcy)
  • Requests for your credit history (hard and soft inquiries)

The report should also include a key or explanation section to help you interpret the details.

Usually the report includes a summary to give you an outline of your credit status. It also separates the healthy accounts from the negative ones which makes its interpretation a little easier.

It may sound strange but checking your social security number is of vital importance. If somehow the SSN is out by just one digit, it could lead to your credit report being merged with someone else’s.


STEP 3: Scrutinize any negative items.

First, verify that there are no duplicated accounts or items. According to the law, you should be notified when any creditors place negative listings on your credit report. In view of that, you should be aware of everything listed on your report. If your creditor has not notified you about any of the items, you should contact the creditor requesting its removal, citing their violation of the Fair Credit Reporting Act.

While checking negative items on your report, confirm creditor names, dates and balances. Also, be sure to check that recent payments are showing up on your accounts. It sometimes takes time for the credit grantor to send the information and for the reporting agency to update their records.

Make sure that all of the information matches your personal records.

Check that old collections and negative information has been removed. The law states that negative information older than 7 years and bankruptcies older than 10 years cannot be reported and must be removed.


STEP 4: Report discrepancies and inaccurate information.

If you have found incorrect information or duplicates on your report, you have the right to dispute that information. This is the most important thing you can do to repair your credit. Federal law places the burden of proof of reporting accuracy on reporting agencies. If they cannot find evidence to support negative items on your credit report, they must remove such items.

The main credit reporting agencies now enable disputes to be filed online and this is quickest and most convenient way to do this. Fill in the online forms and submit your dispute with as many details as possible. You will be able to upload copies of receipts, payments, and statements to support your dispute.

If you would rather, you can also file a dispute by mail. The company websites outline instructions if you decide to do it this way.

You should hear back regarding the results of the investigation between 30-45 days. In the meantime, you can check your dispute status online. When the credit reporting agency inform you of their decision, they should also send you a copy of your amended report. Be sure to check all of the details again.

If negative items are removed from your report, you can be sure that your credit score will improve. How much it improves depends on what negative items are removed. Some items such as bankruptcy, foreclosure and repossession are more damaging than late payments and credit rejections, although every little bit helps.


Step 5. Stay Persistent!

If you have not heard back from the reporting agencies in 30-45 after you request for removal, or your credit report is still showing erroneous information, contact them again! Reporting agencies are typically very good at responding, but it’s not unusual to have to make multiple attempts to have information corrected.


Step 6: Keep it clean!

Whether or not you manage to remove some damaging information from your credit report, one thing everyone can do to repair their credit report is to make sure no new negative items are added to it from now on.

To do this, make sure you:

  • Pay all bills on time.
  • Keep credit card balances low.
  • Open accounts and apply for credit only when absolutely necessary. Each credit inquiry will be listed on your report and high numbers of inquiries can affect your score.

Also, subscribing to a 3 in 1 credit monitoring service such as truecredit.com allows you to keep an active eye on your score, and identify any problems quickly. The service allows you to update and review your credit score every 24 hours, so you’re always up to date.

If you can keep on top of your finances from now on, gradually your credit will repair itself. Remember to check your credit report each year and follow these steps to keep your credit in good shape.