If you have a spotty credit history and you’re working to turn your finances around, you may be wondering how to remove negative items on your credit report. Late payments, charge-offs and overdue account citations can all count against you. There are, however, a few ways to remove past mistakes, one of which is a pay for delete letter.
A pay for delete letter is a negotiation tool to have negative information removed from your credit report. It’s most commonly used when a person still owes a balance on a negative account. Essentially, it’s a way to ask to remove the negative information in exchange for paying the balance.
Even if you’ve gotten yourself out of debt and paid off collection accounts, without a pay for delete letter, negative credit items can remain on your credit bureau file for up to seven years. Time heals all wounds — including credit mistakes — but if you just can’t simply wait around for your credit score to improve, you’ll want to consider taking some actions toward repairing your credit. Read on to learn more about when you should send a pay for delete letter, view sample templates and discover other credit repair options.
How a Pay for Delete Letter Works
An individual with debt writes a pay for delete letter to a collection agency with a request to remove negative information from their credit report in exchange for payment.
First, in order to understand how and why a pay for delete letter works, you’ll need some background on collection agencies. Collection agencies are in the business of buying up debt. They essentially serve as a middleman between you — the consumer — and the creditor. If your account becomes delinquent, the creditor may contract a collection agency to collect payment. If successful, the collection agency receives a percentage of the amount collected.
Often, in order for a pay for delete letter to work, you must offer an amount greater than what the collection agency paid for your debt. There’s no magic number, but generally knowing what the other party wants gives you more information about what to include in your pay for delete letter, increasing your chances of a successful negotiation.
When to Send a Pay for Delete Letter
A pay for delete letter isn’t a magical fix. Not all creditors will accept pay for delete letters. Typically, many mainstream creditors like corporate banks, credit unions and even small-town banks aren’t receptive to this strategy. However, small utility bills, such as phone, cable and power bills, that go to collection are more likely to entertain the strategy. Here are a few cases when you should try sending a pay for delete letter.
- The credit reporting time limit is still several years away. Consider whether the debt is old and about to expire. If so, it will no longer impact your credit score after the time limit has expired, so a pay for delete letter isn’t necessary. If the credit reporting time limit is still far away, you may want to send a pay for delete letter.
- You have the funds to pay the full amount listed immediately. If your pay for delete letter is approved, you often will only have a short window of time to make the payment, so only send one if you’re confident you can pay the total amount.
- You have sent a debt validation letter, and the debt collector has provided proof. In some cases, collectors could request payment even if your state’s statute of limitations on overdue accounts has run out.
Pay for Delete Letter Template
Your pay for delete letter doesn’t need to be long and complicated — or even full of legal jargon. Be sure to provide all the relevant information like dates, payment amounts and other details specific to your scenario. The template below can help you write your own pay for delete letter. Simply update the bolded portions with your own information.
<Your City, State, Zip Code>
<Collection Agency’s Name>
<Collection Agency’s Address>
<Collection Agency’s City, State, Zip Code>
Re: Account Number <XXXXXXXXXXX>
Dear <Creditor’s Name>,
I am writing this in response to your recent correspondence related to account number <XXXXXXXXXXX>.
I accept no responsibility for ownership of this debt; however, I’m willing to compromise. I can offer a settlement amount in exchange for your written agreement to the following terms:
- You agree to accept this payment as satisfying the debt in full (once you receive the agreed upon amount).
- You agree to not list this debt as a “paid collection” or “settled account.”
- You agree to completely remove any and all references to this account from the credit reporting agencies (Equifax, TransUnion and Experian) that you have reported to and validated this account.
I am willing to pay the <full balance owed / $XXX as settlement for this debt> in exchange for your agreement to the above terms within fifteen calendar days of receipt of payment. Understand that this is not a promise to pay. This is a restricted settlement offer and you must agree to the terms above in order for payment to be made.
Should you accept, please send a signed agreement with the aforementioned terms from an authorized representative on your company letterhead. Once I receive this, I will pay <$XXX> via <cashier’s check/money order/wire transfer>.
If I do not receive your response to this offer within fifteen calendar days, I will rescind this offer and follow up with a method of verification letter.
I look forward to resolving this matter quickly.
<Your City, State, Zip Code>
What Happens If a Pay for Delete Letter is Rejected
You should always be prepared for the event that the collection agency rejects (or ignores) your pay for delete letter. Not all agencies will see the value in agreeing to your terms or the practice of pay for delete letters as a whole.
It’s also worth noting that any acceptance of your offer must be made and returned to you in writing. In the event of a solely verbal agreement, you won’t have the ability to prove that an agreement was reached if the collector doesn’t follow through and remove the information from your credit report.
If your letter was rejected, there are still some other routes you can take to repair your credit.
Other Ways to Remove Negative Credit Report Entries
- Send a goodwill letter
- Negotiate a settlement
- Wait out the credit reporting time limit
- Hire a professional
Paying to have a negative item removed from your credit report may seem counterintuitive assuming that a lack of financial means is what caused the item in the first place, but if you’re in a more stable financial position now, a pay for delete letter may be a good option for you to DIY your credit repair. Plus, if your letter is rejected, it won’t cost you anything (other than the postage) and it won’t damage your credit any further. If you’re still not sure how to proceed or your pay for delete letter was rejected, consult with a credit specialist for a free credit report consultation.