Dear Credit Card Adviser, I have an account that was charged off in 1990, and it still appears on my credit report. I can easily dispute this item and remove it because it became delinquent 21 years ago. However, this account happens to be my oldest one as well. My next-oldest account is from 2005, only 6 years old.
The question is this: Should I go ahead and remove this item from my credit report? Or should I keep it because it provides for a longer credit history and therefore outweighs its negative effect?
Any answer would be appreciated. -- Ben
Dear Ben, You have good reason to wonder if this old charged-off debt, which indicates the lender has written off the debt as uncollectible, is worth disputing.
Of course, it's your right under the Fair Credit Reporting Act to dispute outdated information that should no longer be on your credit report. Most derogatory credit report items, such as missed payments and charged-off debts, are supposed to come off the credit report after seven years from the date of first delinquency. This one didn't, and it's certainly fodder for dispute.
Fortunately, I have mostly encouraging news for you in terms of how its removal could affect your credit score.
For the sake of clarity, we'll focus on the FICO score because it's a credit score commonly used by lenders. Five major factors go into a FICO score.
Your payment history, the most important factor, comprises about 35% of your score. This category includes any delinquencies or charged-off debts. Length of credit history accounts for roughly 15% of the score. A component of this category is the amount of time since accounts were opened.
It makes sense that because of the emphasis on payment history that a clean, shorter credit record would be better to have than a long, blemished one.
Barry Paperno, consumer operations manager for myFICO.com, says that a relatively short credit history on the oldest account won't damage your credit score "to the degree that late payments or maxed-out credit cards will."
Not that you should completely write off the importance of having a long credit history. Paperno says the average FICO "high achiever" with a score of 780 or better (on a scale of 300 to 850) established his or her oldest account about 19 years ago.
As for the charged-off account's removal from your credit report, Paperno says it's a good bet your FICO score would improve somewhat. The actual result depends on what else is in your credit report.
"If there are other derogatory items left on his credit report after the removal of this disputed account, he is likely to see only a slight increase in his FICO score," Paperno says. "And if any remaining accounts became derogatory only recently, he may see no increase at all."
Even if your credit history is otherwise squeaky clean, any high credit card balances could mitigate a boost in your score.
Long story short: Removing the account will likely help your credit score but not necessarily if there are other negatives on your credit report.