How To Remove Prescribed Debt From Credit Report

How To Remove Prescribed Debt From Credit Report

Prescribed debt can be a burden on one's credit score and financial stability. Prescribed debts are debts that have not been acknowledged, confirmed, or settled within a specified time. These debts are 'prescribed' after three years of inactivity and cannot be collected by creditors. However, prescribed debts stay on credit reports and can affect credit scores negatively. In this article, we will discuss ways to remove prescribed debt from credit reports.

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Table
  1. Know What Prescribed Debt Is
  2. How Prescribed Debt Affects Your Credit Report
  3. Removing Prescribed Debt from Credit Report
    1. Dispute the Incorrect Reporting
    2. Request a Statement of Account
    3. Pay the Debt in Full
    4. Wait for the Prescription Period to Lapse
  4. Conclusion

Know What Prescribed Debt Is

Before one can start removing prescribed debt from their credit report, they must understand what prescribed debt is. As mentioned earlier, prescribed debt is a debt that has been inactive for three years. According to the Prescription Act, debts, including personal loans, credit cards, and store accounts, are prescribed three years after the last payment or acknowledgment of the debt by the consumer. After the prescription period, creditors cannot legally pursue consumers for payment without a court order.

How Prescribed Debt Affects Your Credit Report

Although creditors cannot pursue consumers for payment after the prescription period, prescribed debts remain on credit reports for up to five years. These debts can affect credit scores negatively, making it difficult for consumers to obtain credit, obtain financing, or even rent a property. Creditors view prescribed debt negatively and see it as a failure to manage debt responsibly.

Removing Prescribed Debt from Credit Report

Dispute the Incorrect Reporting

It is possible for creditors to incorrectly report prescribed debt on credit reports. In such cases, consumers can dispute the incorrect reporting with the credit bureau. The credit bureau will investigate the dispute and remove the debt if the dispute is valid.

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Request a Statement of Account

Consumers can request a statement of account from a creditor to ensure that the prescribed debt has indeed prescribed. The statement of account will show the last payment made on the account and whether the prescription period has lapsed.

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Pay the Debt in Full

Although creditors cannot legally pursue consumers for payment of prescribed debt, consumers can still choose to pay off the debt in full. Once the debt is paid off, consumers can request that the credit bureau remove the prescribed debt from their credit report.

Wait for the Prescription Period to Lapse

The easiest and most cost-effective way to remove prescribed debt from your credit report is to wait for the prescription period to lapse. After the prescription period of three years, the debt will be removed from your credit report unless the creditor takes legal action against you.

Conclusion

Prescribed debt can have a negative impact on your credit report and financial situation. However, there are ways to remove prescribed debt from your credit report, including disputing incorrect reporting, requesting a statement of account, paying off the debt in full, and waiting for the prescription period to lapse. Knowing and understanding what prescribed debt is and how it affects your credit report is essential in managing your finances and improving your credit score.

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