How to Remove Collections from Your Credit Report
November 21, 2019
It is possible to remove collections from your credit report through filing a dispute. It’s important to do so because the effect of an account in collections can drastically lower your credit score. Luckily, it’s not permanent. If the information being reported is unfair or inaccurate and can’t be verified, you can dispute it to see if it will come off your credit reports.
If it is reported fairly, you can try to negotiate with collection agencies to get it removed from your report.
Here are the options you have for removing collections from your report:
Option 1. File a Dispute with the Credit Bureau
Every consumer is entitled to fair and accurate reporting according to the Fair Credit Reporting Act (FCRA). Credit repair, which involves disputing unsubstantiated or inaccurate information on your credit report, can be used to address a collection if it is inaccurate in some way.
Here are the steps you’ll need to take when filing a dispute with the credit bureaus.
- Review your credit report to see if there are any inaccuracies. These can include the same debt reported multiple times, accounts are reported that don’t belong to you, the wrong collection agency is listed on your credit report, and debts that should have fallen off of your report.
- Gather evidence related to the inaccuracy. This documentation is necessary for the credit bureaus to investigate the error.
- Report the inaccuracies to the credit bureaus. Send a letter including information verifying your identity, details of the error, and supporting documentation.
- Wait for the credit bureaus to report back. The bureaus must investigate the dispute within 30 days and report back their findings to you. They’ll get in contact with the debt collection agency at this time to verify the disputed information.
If the debt collection does not respond or is unable to substantiate the information, then the information will be removed.
However, the collections account will remain on your report if the debt collection is able to verify the information.
You can pursue a couple other options to remove collections from your report if the bureaus find it is fairly and accurately reported.
Option 2: Write a Pay for Delete Letter
A pay for delete letter is a negotiating tool to have negative information removed from your report in exchange for payment.
Collection agencies are not obligated to accept this. If they do agree, make sure to get everything in writing to hold the collections agency accountable.
Option 3: Request a Goodwill Deletion
This is a request sent to your original creditor to remove a negative item out of goodwill. This works best if you have a positive history with your creditor.
What Happens When a Debt is Sent to Collections?
Being sent to collections means the original creditor has given up on trying to collect debt that a consumer owes. This normally happens after 180 days of no payment. Typically the lender sells the account to a collection agency in order to recoup some of their lost money.
Once a debt is sold to collections, the agency begins their efforts to contact you for payment. Sometimes, collection agencies don’t report the debt to the credit bureaus if it is paid in a timely manner.
Regardless of your situation, remember that if you are contacted by a collection agency, that you do have rights under the Fair Debt Collection Practices Act.
How Do Collections Affect My Credit Score?
A collections account on your report makes a large impact on your score and your credit history according to Experian. Potential lenders see that you failed to pay for so long that a company had no choice but to send you to collections, no matter what your circumstances may have been at the time.
This is a huge red flag for anyone assessing you as a credit risk. It sends the message to lenders that a consumer cannot be trusted to repay their debts.
Can Paying Off Collections Raise My Credit Score or Remove it From My Credit Report?
Paying off a collections account alone typically does not raise your score and does not automatically remove it from your credit report. In fact, paying off a collection account doesn’t normally change how fast it comes off your credit report.
A paid collections account will typically stay on your credit report for seven years from the date the account was first reported past due. As long as it remains on your report, it will have a negative impact on your score. The severity of its impact lessens over time until it finally falls off after about seven years.
How to Avoid Collections
It’s best for your credit and your finances to avoid collections when possible. Here are some steps you can take to avoid collections:
- Track your spending to create a monthly budget and cut down on unnecessary expenses. There are a slew of budget tracking resources available on the internet, and many of them are free.
- Consider debt consolidation if you have trouble keeping up with minimum payments.
Try negotiating with creditors before your account is sent to collections. If you cannot make your minimum payments for a good reason, reach out to them and explain your case.
You never know until you try — and this is something certainly worth trying. The creditor may be willing to negotiate a new payment plan with you, allowing you to avoid being sent to collections or reporting a charge-off on your account.