Ask for a 'goodwill' deletion

If you have only one or two bad marks on your credit records, you may be able to get them expunged, says John Ulzheimer, the president of consumer education for SmartCredit.com, based in Costa Mesa, Calif.

Say you've paid late but have an otherwise spotless credit history. You can ask your lender for a "goodwill deletion," he says. "It doesn't mean it is wrong or was reported incorrectly. Essentially, what you're doing is asking the creditor to cut you some slack."

The good news: "You'll be surprised how many times they will," Ulzheimer says.

The bad news: "If you're habitually late, it won't work," he says. This is strictly for folks who err rarely.

As for whom to ask, start with customer service. But you may have to go up the ladder. And make your request as soon after the error as you can. "The sooner, the better," Ulzheimer says.

It can make a difference in a credit score. "If you have two or three bad things on (your) credit report and you get one or two removed through goodwill deletion, you will be surprised how quickly your score will go up," Ulzheimer says.

Pay for removal

If you have an account that's gone into collection, sometimes collectors will agree to remove the debt from your credit reports if you agree to pay if off.

"You'd be surprised how many collection agencies will stop credit reporting in exchange for payment," Ulzheimer says.

But before you agree to or pay anything, you want the arrangement in writing. Get a letter on company letterhead that spells out the collection agency will remove the debt from all three major credit reporting bureaus.

The process is sometimes called "pay for deletion," Ulzheimer says. And "while credit bureaus frown on those arrangements, it's not their data that's being reported."

Protect yourself in a short sale

After a short sale, the mortgage lender often will report to the credit bureaus that the home loan was settled for less than the full amount. In addition, it can also note the amount of the deficit as "balance owed" on the credit reports, even though the obligation has been finalized and no additional money is owed.

In other words, if you have a $300,000 mortgage and sell your house for $250,000, the bank could report a balanced owed of $50,000.

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While the short sale will damage your credit scores dramatically (as much as a foreclosure, according to examples released by FICO), you can mitigate the damage slightly by arranging with the lender not to report a balance owed.

The best time to negotiate this with the lender is before or during the short-sale process, Ulzheimer says. While you can attempt it after the fact, that's not as practical.

"After it's been paid, the lender starts to lose interest in speaking with a former customer," he says.