Peer review: Debtor may adjust data to bureaus

Ka-Ching's financial experts at Edina-based Accredited Investors Inc. can be reached at kaching@startribune.com.

Q I've recently begun paying off debts that were listed on my credit report for more than a few years. Is it safe to assume that as I pay them off, they will automatically be removed from my report, or do I need to do more to ensure they are noted as paid and/ or removed? Also, should I wait to get a new credit card until after most of the debt is paid because I'll probably get a better interest rate -- or is it a bad idea to wait?

GW

A If the debts you mentioned went to collections, paying them off will not remove them from your credit file for seven years.

You can write to each debtor, asking it to adjust the information it is reporting to the three credit bureaus. This is known in the industry as a goodwill letter. There's no guarantee they'll agree, but it may be worth a try. Go to www.myfico.com and search under "goodwill letter." You will likely find some sample letters.

Depending on the severity of your situation, those debts may not have affected your score as much as you might suspect. A score is determined by so many factors it's impossible to say how important any single one is. The importance of each depends on the overall information in your credit report.

If you have many collection items on your report, removing one of them may not affect the score very much. Just remember that improving your score is a process, so your score should improve as you continue to do the right things.

If you have had problems, I wouldn't wait to get the new credit card. You want to reestablish your credit history by opening a new account and paying it on time as soon as possible. Just don't open a lot of new accounts in a short period. That can further damage your score.

KRISTA J. ZACHMAN, CFP