How to Remove Collections From Your Credit Report
You went through a hard time, and an account went to collections. Now it’s on your credit report. Options such as a goodwill deletion, deletion due to a new collections owner, and paying the collections company for a deletion may allow you to get the collection off your credit report and improve your credit score.
Table of Contents
Ask for a Goodwill Deletion
The best-case scenario is that you have already paid off the collections debt. This puts you in a position to ask for a goodwill deletion. The major problem with collections is that they will appear on your credit report for seven years. If, however, you are attempting to secure a mortgage or auto loan, for example, and the black mark of a collections account on your credit report is holding you back, you can appeal to the current creditor.
To request a goodwill donation, you need to send a letter explaining that you paid the account and would like to request a deletion, as it is preventing you from obtaining a loan. If you have made all payments on time, your case looks better. There’s no guarantee that the creditor will remove the account, but it doesn’t hurt to ask. It’s important to note that the late payments will still appear, but the collection itself is removed, along with the negative impact it carries.
If a goodwill deletion is not an option, order a credit report and read it carefully. You want to check the collections entry for any mistakes. The world of debt collections can be very messy, and duplication, misattribution, and other errors are not uncommon. If there is any inaccuracy, from the account number to how much was owed, you can file a dispute with the credit bureaus. Under the Fair Credit Reporting Act, the bureaus are obligated to remove entries that contain inaccuracies.
How to Dispute Collections
To dispute a collections claim, you must send a letter of dispute within 30 days of receiving the collections notice. In your letter, provide any necessary information about the debt, such as your name and identifying details about the debt.
Request that they provide details about the original creditor, and ask them to remove reports of the debt with credit reporting agencies until the dispute is settled. Additional letters should also be sent to the relevant credit reporting agencies, providing your name and details of the debt.
These letters will notify the credit reporting agencies that the debt is in dispute. Keep thorough records of all interactions with the original creditor and the collections agency.
Determine Which Collections Agency Owns the Debt
Collections accounts are often sold to other collectors every six months or so. If your account has been sold to another collections agency, but your credit report has not been updated, you can dispute the entry and have it removed. This buying and selling of debts is a common source of errors, so knowing which collection agency you are working with, or which agency you actually paid the debts to, can go a long way to helping you resolve accounts on your credit report.
Verify the Debt
Again, if you are contacted by a debt collector, you have 30 days to ask the collector to verify the debt. You may not be responsible for the debt itself. Just as credit reporting errors related to debt collections are common, it isn’t unusual for someone else’s debt to accidentally become associated with your name or Social Security number. If anyone is telling you to pay off a delinquent account, ask for the debt verification in writing, especially if the debt was not verified at all, and file a dispute with the bureaus.
Pay for a Deletion
If you have not paid the account off, and can’t remove the account by disputing it, send a letter to the collector to negotiate payment for deletion. If the collector agrees, you pay the account; in exchange, the collector removes the account. But remember the late payments will still appear.
Be sure to use certified mail with a return receipt so you have proof that the collector received the mail. Ask for a signed copy of the agreement on their company letterhead. If the collector does not remove the account from your credit report, file a dispute with the bureaus and use the signed agreement as evidence of the agreement, along with proof of your payment.
As a side note, in newer scoring models, such as FICO 10 and VantageScore 4.0, credit bureau Experian notes that “paid collections are either omitted from the score calculation or are weighed much less.” This is the case regardless of whether you have made an agreement to delete the account, and you should pay off the account in any case.
Sample Letter to Request Deletion
[Your City, State, Zip.]
[Collector’s City, State, Zip.]
Re: Account Number
Dear Collection Specialist:
[Open by explaining which collection it is that you would like to address, but ensure that you state that this is not an acceptance or acknowledgment of the debt.
Offer a reasonable amount of payment, and emphasize that you are willing to pay this amount under the condition that the collector marks the account as “payment in full” (and no other similar designation), and removes reports of the account from any and all credit bureaus. Discuss how you intend to pay the debt, e.g. cashier’s check, money order.
State that if these terms are agreeable, the collector should send back a written agreement outlining the above details on their company letterhead. Provide an ultimatum; if the collector does not respond by the deadline, the offer will be null.
Dispute Overdue Deletions
Finally, if your delinquent account isn’t removed after seven years — as specified for past-due accounts in the FCRA — the collections agency may have tried to “re-age” the debt, which will keep it on your record for longer. File a dispute and provide evidence of the first date of delinquency, showing it has been more than seven years.
Hire a Credit Repair Company
If you would rather hire someone to do the hard parts for you — especially drafting the letters — you can employ a credit repair company to do all the communication and bureaucratic compliance work on your behalf. They have experience, and while they aren’t guaranteed to boost your credit score, you may stand a higher chance than if you try by yourself.
Image Source: https://depositphotos.com/
A former newspaper journalist, Cole spends his free time reading, writing, playing video games, watching movies, and learning about every subject under the sun. He lives with his wife and daughter in Idaho. Follow Cole on Twitter: @ColeMayer42