No one wants to have a collection account appearing on their credit reports as we all know it is a big hit to our credit score. And, credit bureaus can report a collection for up to 7.5 years.
Here are a few tips for you on ways to remove a report of collections from your credit report.
It isn’t easy to do but there are some actions you can take. First, you need to have all the documentation you can find on the account in question including a copy of your credit report itself. You can get this for free from each of the 3 bureaus at no cost (you can only do this once a year).
Although it does not always work, you can write a letter to the bureau called a ‘pay for delete’ letter. waiting it out, It will help if you have paid off the collection even though it won’t be removed from your report.
How to Pay for Removal of Collection Accounts
The ‘pay for delete’ letter is one you issue to the collection agency before you pay them asking them to remove the collection account from all credit reports in exchange for your payment. You will have to initiate this action as collection agencies will not; they don’t want the extra work but they want your payment more.
Unfortunately, in many cases, the collection company is unable to remove the negative collection information. The credit bureaus generally do not allow this since they have contracts with the very same collection companies. But, if you get a company that will do so, be sure you have it in writing.
If you have a legitimate issue with the collection report, then it is more likely you can get it removed if you pay the bill in question. For example, this may be due to lack of performance for services you had done.
Related Reading: Removing a Closed Student Loan from Your Credit Report
‘Goodwill’ Deletions
It is possible if you have excellent credit history and you just made a mistake in missing a payment, you can write to the original company you owed money to and request they remove the collection report. This won’t work if you have average to poor credit.
You should send your request by mail, certified is best, and make your case. You can find sample goodwill letters online and there have been some real success with this strategy but it is not for everyone.
Paying Off Collections
Well, just paying what is owed won’t help your credit score right away. But, as will all credit information, the older it gets the less impact it has on your score. So, over time the impact of a collection on your credit report will diminish and eventually go away.
Disputing your Collection report
On rare occasions, a collection report will be applied to the wrong person. If this is you, then do not pay the collection. Instead, dispute the report with factual information that shows you did not make the purchase. A formal dispute must be in letter form and mailed to each credit bureau separately.
Before you send your letter, challenge the collection company and ask them for proof it is you. Your name may have been mixed up with someone else – who has the same name. If they cannot prove that you are responsible, then they are forced to remove the report.
How Long Do Late Payments Stay on Your Credit Reports?
Collection reports remain on your credit report for 7 years. This is different than bankruptcies that stay on for 10 years. A missed or late payment may have different impacts due to the amount of time it was late. Being 30 days late will look much better than if you were 90 days late.
When you review your credit report be sure to read it very carefully if there is a collection report on there. Any part of the information that you find to be incorrect is grounds to dispute the report (even if it is true) and report it as inaccurate to the credit bureaus. They must verify the information you provide with the source of the information and, sometimes, they do not get a response from the creditor and your collection report is removed. Your creditor has only 30 days to provide such proof.
The BEST way to handle your credit?
Start adding new, positive credit references to offset any negative information. Over time this is very successful in improving your scores. Even if you have to wait for a collection report to be removed after 7 years, you will find this strategy to be very successful.
Related Reading: How to Improve Your Credit Score for Better Financial Health
VantageScore 3.0 & FICO 9: Hope for Consumers?
VantageScore 3.0 and FICO 9 are credit scoring systems that use very relevant data from the 3 major credit bureaus to calculate your credit score.
The newer FICO 9 model ignores collection accounts where the original balance is less than $100. Similarly, the new VantageScore 3.0 model ignores all paid collections accounts, as well as any collections, paid or unpaid, that are under $250. Do not rely on which system is being used for your credit report, it is not something you can find out. But there is a chance that your score won’t be affected if it is a small collection amount.
Related Reading: Things You Should Understand About FICO Credit Scores
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