When should you attempt to get an account removed from your credit reports? Believe it or not this question has nothing to do with “credit repair.” In fact, it’s actually asked more often from people who don’t understand how the credit reporting and credit scoring systems work, yet have pretty decent credit.
To some people a credit report is only supposed to reflect current obligations, rather than current and past obligations. This leads many consumers to think that they have to argue with the credit bureaus and attempt to get old, paid, or otherwise satisfied credit obligations removed from their credit reports. This is unwise, and dangerous.
There are several reasons why you should never attempt to get old and good credit items removed from your credit reports. First and foremost, the older your credit reports the better your scores will be. And, how do credit scoring systems set the age of your credit reports? They do this two ways; by looking at the opening date of your oldest account and, second, by averaging the age of all of your accounts. If you are successful in getting old accounts removed from your credit reports you will almost certainly cause them to look “younger” to credit scoring systems. Incidentally, credit-scoring systems do not look at your date of birth so they can’t use that in lieu of account age.
Another reason this is an unwise move is because of a little known yet important measurement within credit scoring systems called “account diversity.” You earn more credit score points by having a well-rounded credit report than you do by having limited experience across account types. This means consumers are going to do better with a history of credit card, auto loan, and mortgage usage.
If you are successful at getting old accounts removed from your credit reports then your actions are permanent, meaning you will not be able to convince the credit reporting agencies to replace the deleted account down the road when you realize your mistake. And, efforts may very well leave you with lower credit scores and no fast way to return them to their former glory. To avoid this credit score disaster, here are a few “credit” suggestions to live by;
1. Don’t concern yourself with getting old negative items removed. Federal law defines how long they can remain on your credit reports. Normally most negative items can remain for between 7 and 10 years although there are some exceptions. Point being, it’s a waste of your time because Federal law has already taken care of this.
2. Credit reports are meant to be credit histories and were designed to house and maintain a record of old, satisfied account relationships. Old credit accounts are like a fantastic GPA in high school or college. You never ever want a record of that to disappear. Here’s why…
3. Credit scoring systems will reward you for a long history of responsible credit management practices across multiple account types. In the FICO® scoring system account “age” is worth 15% of your credit score points and account diversity is worth 10% of your credit score points. This means a full one-fourth of your credit score points could be negatively impacted if you were successful in getting old accounts removed.
Don’t do it!!
John Ulzheimer is the President of Consumer Education for Credit.com and owner of 2StepCredit.com. He is an expert on credit reporting, credit scoring, credit score ratings, and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry. He is a weekly guest on FOX’s The Willis Report and is the credit blogger for the New York Times and Mint.com. He has served as a credit expert witness in more than 65 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.
