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In this Article: How to Remove A Collection from Your Credit Report, and recommended course of action to help you clean up your credit.
Collection accounts can haunt you long after they start. They can drag your credit score down and make future lenders decline your application.
Can you remove a collection or is it a permanent part of your credit history?
We walk you through your options and rights below. Follow along in our step-by-step guide to learn how to remove a collection from your credit report.
Can Paid Collections be Removed from a Credit Report?
The answer is tricky. Can creditors remove the collection? Technically, yes.
Will they? That’s the trickier part. Some will on a goodwill basis, but others won’t or claim they can’t (which may partly be true). With the right steps, you may get lucky though, so it’s worth a try. What do you have to lose?
The best way to remove a collection from your credit report is by hiring a credit repair company, like Credit Saint. They remove thousands of collections each year.
How to Remove A Collection from Your Credit Report (Step-by-Step)
1. Research Your Options and Analyze
You have many options. We suggest you exhaust ALL of them. Start with the easiest and work your way up until creditors remove the collection from your credit report.
Check your credit report. Consumers have access to each of their three credit reports. Use this to your advantage. Pull your reports and look over the collections, we’re talking every detail. You can get your FREE credit score here.
Look at the details. If anything is incorrect, account number, account status, payment history, payment status, or account validation, take note of the errors and gather proof of the inaccuracies.
Determine who made the mistake. Credit bureaus often overlook old collections, letting them report longer than the 7 ½ years they’re allowed.
Creditors often report misinformation, resulting in erroneous information on your credit report. Figure out where it went wrong and report it.
2.Dispute the Collection
If you found errors, dispute them in writing only. Never agree to anything verbal. Who you dispute to depends on the error.
- If the credit bureau reported the wrong account number, amount, creditor name, or any other information, write a dispute letter to them reporting the inaccuracies. You can do this online or via mail (but send it certified).
- If the creditor reported the wrong information, write to them, sending the debt validation letter via certified mail. Report all of the inaccuracies and provide proof.
- You have 30 days to dispute a collection’s validity with the creditor. Dispute it right away and if they can’t validate it within 30 days, the collection must come off your credit report. Always follow up though; don’t assume they deleted it.
3. Request a “Goodwill Deletion”
If you have a good payment history, but fell on hard times, you may be a good candidate for a goodwill deletion. This isn’t across the board, though. You can request it, but creditors don’t have to oblige.
Creditors offer goodwill deletions on rare occasions and only when you’ve already paid the collection. You’re asking the creditor to remove the collection so it’s as if it never existed (but you made good on the debt).
This gives future lenders a false impression of your creditworthiness, but in some cases, it’s warranted.
Ask for a goodwill deletion in writing. Include brief details regarding why you paid late or didn’t pay at all, and how you’ve recovered.
Keep your letter polite and to the point and never point blame on the creditor – only plead your case as if it were a dire situation that led you to this point.
4. Pay for Delete
A pay for delete is as uncommon as the goodwill deletion but worth a try. If you can pay the debt in full, negotiate with the collection agency asking them to remove the debt from your credit report in exchange for payment. It sounds a bit like a bribe, and in some cases, it may be.
Many creditors won’t do this because they feel it’s unethical. You’ll have the most power if you have other collections with the same collection agency.
If you promise to pay the other debts in full in exchange for deletion of the current collection, they may do it for the sake of receiving further payment.
Like the goodwill deletion, make your request in writing and keep it polite. If the creditor agrees, get the agreement in writing so you can hold them to it when it’s all said and done.
5. Worst Case: Wait Until the Collection ‘Drops’ from Your Credit Report
Many people have no choice but to wait for the collection to ‘drop’ from your credit report. 7 ½ years seems like FOREVER when you’re trying to get new credit, but the more time that passes, the less damage the collection does to your credit score.
If you can prove you’ve fixed your financial issues and haven’t had collections since that time, the collections may not hurt you as much as you thought.
What is a Paid Collection?
Paid collections, as the name suggests are collections you paid. You made good on your debt whether you made a lump sum payment or entered a payment arrangement.
You may have even paid less than the full amount but ‘settled as agreed’ as it would report on your credit.
Paid collections may look like:
- A medical collection you didn’t know you had until you received the notice from the collection agency. Your insurance company did not cover the amount you thought they did and now you owe the difference. You pay it in full when you receive the letter.
- A credit card you let get more than 180 days behind and went to collections. The balance was too much for you to pay at once, but you worked out a monthly payment arrangement and paid it off in 2 years.
- An installment loan you stopped paying but negotiated with the collection agency to accept less than the full amount to settle the debt.
Bonus Insight: Please note, creditors aren’t under any obligation to remove paid collections. By law, they can remain on your credit report for 7 years, just like unpaid collections.
What is an Unpaid Collection?
As the name suggests, unpaid collections aren’t paid. Whether you dispute the debt or just ignore it, the unpaid collection looks worse on your credit report than paid collections.
When you make good on your debt, it shows lenders you want to do what’s right. If you leave it unpaid, lenders assume you’re financially irresponsible, even if there were circumstances that led you to that point. Lenders only know what the credit report shows.
Unpaid collections may look like:
- You stop paying your credit card and the company sells the debt to a collection agency. You receive collection letters but ignore them, letting the collection sit unpaid for 7 years.
- You miss a medical payment because you didn’t know you owed it. The medical facility sends it to collections. You don’t agree with the charge and try fighting it with the collection agency/medical facility. It sits unpaid during this time, making future lenders think you’re financially irresponsible.
Original Creditor vs. Collection Agency: What Role Do They Play?
The original creditor is the entity you owed money to, such as a credit card company, bank, or other financial institution.
The original creditor reports your tradeline throughout the time you have the account, reporting timely and untimely payments.
The original creditor’s tradeline remains on the credit report even if they send it to collections, so future lenders see the default.
The collection agency is the company the original creditor sells the account to for pennies on the dollar. Collection agencies use different tactics to get you to pay the collection in full or as agreed if they propose a settlement.
The collection agency also reports to the credit report, so even when you pay a collection and have it deleted, the negative payment history with the original creditor still exists.
How Does A Collection Affect (Hurt) Your Credit Score?
Collections hurt your credit score tremendously, here’s why.
Your payment history and collections make up 35 percent of your credit score. That’s the largest percentage of your credit score. If even one account goes to collections, your credit score may fall as much as 100 points.
In the newest FICO scoring models, paid collections have a much lesser effect on credit scores, but many lenders still use the old credit scoring models, which means your credit score suffers quite a bit from collections.
When Will a Paid Collection Fall Off Your Credit Report?
Paid collections remain on your credit report just as long as unpaid collections (7 years) UNLESS you do one of the following:
- Negotiate a pay for delete
- Ask for a goodwill deletion
How Many Points Will My Credit Score Increase Once A Collection is Deleted?
How your credit score reacts to paid collections is a slippery slope. If lenders use the latest credit scoring model – FICO® 9, your credit score may increase if you pay your collections because this model doesn’t include paid collections in its calculations.
If they use older credit scoring models, there may not be much of a difference because the old models don’t consider paid collections – all collections have the same effect.
How Long Do Collections Stay on Your Credit Report?
Collections stay on your credit report for 7 years (plus 180 days from the first delinquency). But, they may not affect your credit score the entire time.
With any credit scoring model, the more time that passes after the collection activity, the less it affects your credit score, but the collection remains on your credit report for the 7 years unless you use one of the above methods to delete it.
How Do Collection Accounts Start?
You may wonder, what makes a creditor send your account to collections? It all starts with that first missed payment.
- You miss your due date and the debt goes 30 days delinquent.
- You’ll receive phone calls, emails, texts, and letters in the mail asking you to contact them. At this point, your account remains with the creditor.
- Once you’re 60 days late, the creditor usually turns your account over to their in-house collections department.
- You’ll receive more phone calls, emails, texts, and letters. This time if you call the creditor, you’ll go straight through to the collections department, not customer service.
- The correspondence may be less ‘polite’ and more demanding at this point.
- If you let the account remain unpaid for 180 days, creditors usually give up at that point, selling your account to collection agencies for a fraction of the full balance.
Below is our recommended course of action for ALL consumers asking, “How to Remove a Collection from Your Credit Report.”
Hire a Credit Repair Company to Remove the Collection
Disputing and negotiating collection accounts is overwhelming. If you miss one detail, it could derail your efforts. Hire one of the best credit repair companies to remove the collection from your credit report.
These skilled experts understand the process and does it daily. Collectively, they have removed thousands of negative items and successfully restored their customers credit.
We recommend Credit Saint due to their transparency, standout customers service, PROVEN results, and best-in-class customer experience. With the help of Credit Saint, this issue will be resolved in no time.
If you know your collection account is inaccurate or you paid it and they agreed to delete it upon payment but did not, consider the professional expertise of a credit repair company.
>> More:Credit Saint Review
Bottom Line: How to Remove A Collection from Your Credit Report
Your best bet is to pay your debts on time and not end up in collections. If you do, keep careful track of every detail. One mistake and you can dispute the account, getting it removed from your credit report. This will increase your credit score.
If it’s valid and you can pay it, consider negotiations to delete the trade line from your report or ask for a goodwill deletion.
If none of those work, know that paying the debt makes you look better to future creditors even if the collection still exists on your report.
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