Understanding I9 Codes on Credit Reports: What You Need to Know

What Is an I9 on a Credit Report?

Credit reports contain codes to give lenders a quick review of the status of your account. If you have I9 on any account, it will cause you serious problems. At this point, there is little you can do about the negative item or reduce its impact. Some lenders, however, may negotiate with you to remove this status.

Implication

Accounts only acquire the I9 status when a lender reports an installment loan account as noncollectable, according to finance expert Suze Orman. Usually, the lender declares the debt a charge-off -- an accounting technique to put the debt in the losses column and make it tax deductible. This is the worst status for a debt because it means the lender believes the borrower cannot or refuses to pay the debt back. The letter stands for the type of loan. Delinquent revolving loans, for example, appear as R9.

Time Frame

Lenders can report your debt in I9 status to the credit rating agencies as a charge-off any time you fall behind on your payment. Most lenders, however, wait at least 180 days before giving on collecting it. After the charge-off, the creditor may sell your debt at a discount to a collections agency, send it to an internal collections department or sue you.

Effects

A debt collector or lender will probably pursue any I9 account worth more than $2,000 after a charge-off, according to CardReport.com. They can take legal action until the statute of limitations expires on the debt -- the SOL generally starts four or five years after the lender reports your account delinquent. A judgment might order a wage garnishment, garnishment on your bank account and possibly even retirement savings.

Tip

It is possible to remove an I9 from your credit report if you and the creditor agree that the lender will report the status as inaccurate to the ratings agencies. In the return, the creditor will want a full payment or possibly a portion of the debt you owe. You may need a lawyer who specializes in debt management to guarantee the creditor will remove the negative. Also, never negotiate with a collections agency because it does not have the power to remove I9 from your report.