We are often asked if paying an account or unpaid default will lead to the listing being removed from a credit file.
From a purely legal standpoint, there is no association between paying an account and the removal of a payment default!
The law states that there needs to be an error with the listing or the process followed by the credit provider in order for a default to be removed. Paying the account will allow for the status of the listing to be amended to “paid” or “settled”. In today’s tough financial markets this change in status is unlikely to make a great deal of difference to the borrowing potential of a consumer.
Removing an Unpaid Default Listing
If a consumer was to contact a credit provider and say “I will pay the default/account if you remove the default listing”, the answer will almost certainly be no.
Even if a credit provider wanted to remove the negative listing on this basis, it’s still not that easy. The credit reporting agencies require a written request from the credit provider asking for the credit listing to be removed. This includes an explanation stating what fault had occurred. Simply stating “please remove the listing as the account has been paid” will usually result in the credit reporting agencies refusing to remove the listing.
If it is found that the listing is inappropriate or was not entered correctly, then the listing must be removed regardless of the status of the account.
It is important to note that the removal of a default under these circumstances will not erase the debt. The credit provider is free to continue recovery action. This includes the transfer of the debt to a mercantile agent which may result in the recording of a new default listing.
Credit Repair and Default Listings
The payment or settlement of a debt is an important aspect of credit repair. If we are approaching a credit provider to remove a default listing for an unpaid account; we often notice a reluctance to the removal. Credit providers may feel as though the removal may weaken their position and limit the chance of being paid. In saying so, we must remember that Credit provider listed the default as they felt like they owed money.
It is important to note that paying or settling an account may not always lead to a positive outcome.
Paying a debt will however give you the best possible chance for success
The removal of a default from a credit report often comes down to a breach of legislation. As you would expect, a credit provider who is owed money will most likely protect their position. However it is more likely for them to be more open to our point of view when the account in question is paid.
Different credit providers have different attitudes towards paying off a debt. To many companies the payment of the account is of major importance and can be a significant factor in the outcome of the matter.
For this reason, we always recommend that a client either pays their account or allow us to negotiate the debt as a part of the credit repair process. This will give them the highest possible chance of a successful outcome. There are of course situations where the payment of the account is not appropriate, such as disputed amounts or fraud. These matters are handled on a case by case basis.
Court Listings
It is important to note that the removal of court listing such as a Judgment or Writ is almost always dependent on the payment or settlement of the debt. The removal of a court listing is less about fault and error and more about the cooperation of the plaintiff.
The line of least resistance to achieve the removal of such a listing is to have the plaintiff agree to execute a legal document. The document must allow the matter to be reheard and set side with the court. A plaintiff is highly unlikely to consent to this if they feel they are owed money because following the matter being set aside. As such the plaintiff waves their claim and their legal action is no longer active.
Be aware
There are credit repair companies that try to bully and intimidate credit providers into submission. In our experience this approach does NOT lead to a positive result. This approach will only alienate the credit provider, making effective communication impossible.
This kind of behaviour is drawing unwanted attention to the industry. When administered correctly, Credit Repair is a highly valued and needed service that has the potential to change people’s lives in a positive way.
It is important to understand that honest and effective credit repair is often about reaching a positive outcome for all concerned including the credit provider. Clean Credit pride ourselves in providing honest and ethical credit repair.
Click here to learn more about the removal of judgements from a credit file.
John Dickinson
Updated March 2019