6 Steps to Remove Collections from Your Credit Report


BY Ally Abernathy

how to remove collections from credit report

5 minute read

If you’ve had collections listed on your credit report, then you know it can drop your FICO score significantly.

But how do you remove collection accounts from your credit profile?

Since the Credit Bureaus have cracked down on collection agencies offering pay for deletes.

The process of creditors removing collections from consumers reports if they pay the balance.

Getting collections removed has become a much more difficult task than in it was a few years ago.

In this article we’re going to explain some proven strategies to help you get collections removed from your credit report, and increase your credit rating.

How long before a collection is reported the the Credit Bureaus?

Once an account goes about 150 days past due a creditor will turn the account over to collections. They will either pass it on to their in-house collections department, or sell the debt to a collection agency for pennies on the dollar. The collection agency will attempt to collect the debt from you. Usually you are given a few weeks to settle the debt before they report to the Credit Bureaus. However, they may also report it immediately.

If at all possible it is best to work out a settlement arrangement with the collection company before it is listed on your report. Usually they will work out a payment arrangement with you. This way you can avoid the account from hurting your credit history.

Disputing inaccurate collections directly with the Credit Bureaus

If you notice any information on your credit report that is inaccurate, you can dispute it with the Credit Bureaus directly.

You can dispute anything on your credit report with all three Credit Bureaus by mail, online, or by phone.

Credit Bureau Dispute Information

TransUnion LLC
Consumer Dispute Center
P.O. Box 2000
Chester, PA 19016

Tips for disputing your Transunion credit report

Online: https://dispute.transunion.com

Phone: 800-916-8800 – 8am-11pm EST

Experian Dispute
P.O. Box 4500
Allen, TX 75013

Tips for disputing your Experian credit report

Online: https://www.experian.com/consumer/upload/

Phone: (714) 830-7000

Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30374

Online: https://www.equifax.com/personal/disputes

Phone: (800) 846-5279

Will paying off a collection improve your credit score?

Actually this is a common misconception. The fact is, paying off a collection account will not improve your FICO score. Collection agencies and debt settlement companies will tell you the opposite because they want your money. When you pay off a derogatory account the balance will be reported as paid but your credit score will not increase.

The number of collection accounts you have regardless of the amount owed count against your credit rating the same. The older these accounts get the less impact they will have on your score, but paid or unpaid it doesn’t matter.

The only way you can increase your credit score is by having the collection account completely removed from your credit report entirely.

Here are the 6 steps to take to remove collections from your credit report

1. Ask the Collection Agency to Validate the Debt

The Consumer Financial Protection Bureau (CFPB) regulates collection agencies and requires them to produce a consumers request to validate the debt be provided within 30 days. Otherwise they are subjected to heavy fees and fines. You can find a sample debt validation letter that you can mail to the creditor here.

Make sure you send it certified mail, if they fail to respond within 30 days you will have documentation to include on your report. You can initiate a complaint here.

2. Dispute the Account with the Credit Bureau even if it’s accurate

The Credit Bureaus will launch an investigation on anything you dispute, unless they consider it to be frivolous. Even if a debt collection account if yours and is accurate you can still dispute it. You will have to claim the account isn’t yours or that is inaccurate in some way. The Credit Bureau will launch an investigation and has 30 days to verification the account belongs to you or it must be deleted from your report. This is the basic principle behind credit repair companies.

They simply dispute the negative credit items and hopes the creditor fails to validate them within 30 days. Medical debt is one of the easier types of debt to get removed from your report because of the HIPPA privacy laws. You may be able to get 50% or more of your medical collections removed from your report simply by disputing them. Other types of accounts less frequently deleted, but getting half of them deleted is not uncommon.

3. Try to set up a “Pay for Delete”

If steps 1 and 2 don’t work and you’re not able to get collections deleted, the next step is to try and negotiate a pay for delete. This is when a collection company agrees to remove a collection account from your credit report if you pay off the balance.

The Credit Bureaus have cracked down on collection agencies allowing pay for deletes. Credit Bureaus don’t like this type of practice, and many creditors no longer allow this. But there are still many debt collectors that will remove collections from your report. It’s worth asking if they will do this for you. If so, it’s the easiest way get collection accounts removed.

Click here to view a sample pay for delete letter

4. Settle the debt and dispute it again

Many debt collectors will allow you to settle the debt for less than the amount owed. Since they purchased the debt for pennies on the dollar, they can accept half of the balance and still make a large profit. Just call the collection company and tell them you wish to settle the debt. usually they will want the payment in full and will knock between 20%-60% off the balance to settle the account in full.

When you settle the debt it does not help your score and doesn’t delete the account from your report. But, you will now be able to go back to the Credit Bureau and dispute the item again and hope the creditor does not go through the hassle of validating a debt thats been paid. They have no incentive to do, so they may not respond to the Credit Bureaus request.

5. Wait for the account to be sold to another agency and dispute it

Debt is constantly being sold and re-sold from collection agencies. When one collection agency can’t get a payment on a debt, they may choose to sell the debt to another collection agency to try and collect. At this point the creditor listed on your credit report no longer has your account information so you can dispute it and may have luck having it deleted.

 

6. Wait a few months and dispute the account again

If you failed to get the collection removed from your credit report by this step, don’t lose hope. Let a couple months pass by and try to dispute the account for another reason. You can dispute accounts for several diffident reason, and the older the paid collection gets the more likely the creditor will ignore the Credit Bureaus requests.

In Conclusion…

When you get a collection account reported to your credit report you shouldn’t panic. It’s not the end of the world. These steps can help you get the collection removed from your credit report. Even if you’re not able to remove the account from your report, the older the derogatory account information gets the less impact it has on your FICO score. If you settle a debt and still aren’t able to get it deleted by disputing it. Only time will help, and you should rebound fairly quickly if its just a single collection.