How to Remove a Collection from my Credit Report?

Updated: Aug 3


There are so many conflicting stories as to whether you should pay a collection account or not.


But think about this fact, having a collection on your credit report can hold your credit score down by 100 points or more.


Yikes!

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So unless the account is 7 years old or more, it is in your best interest to investigate the account and take care of it. Bottom line!


Here’s how to do that in 5 easy steps:

  • Dispute if it’s accurate

  • Dispute if it’s been sold

  • Pay for deletion

  • Write a letter of goodwill for deletion

  • Wait it out

Dispute if it’s accurate


Your first line of action is to pull your credit report to verify the information is accurate. According to the FDIC, credit bureaus have to report accurate information on your credit report. Now just like any human or human entity, they’re imperfect and that imperfection can work in your favor.


About 20% of consumers have inaccurate information on their credit report. In the article, “4 Ways To File A Dispute On Your Credit Report!”, it gives simple ways to file a dispute on your report.


This may be the last step you have to take. But in case it’s not, the next thing to do is………….

Dispute if it’s been sold


If you have a collection on your account and it’s accurate, you can dispute whether or not it has been sold. You can follow the same steps as you would to file a dispute of inaccuracy.


Why is this important?


This is important because, sometimes collection agencies will try to add interest and charges to the debt. Please note, you have the same rights as you had with the original creditor.


Unless the terms stated in the original creditor agreement that interest can increase and/or charges are subject to change, they can’t do this.


You are also owed notification that your debt has been sold to a collection agency by the original creditor. If you have not been notified properly that any changes has been made in this regard, you may have to seek legal action.


Pay for deletion


Next step is to “pay-for-deletion” , now this sounds shady but believe me it’s not, you are just paying off the account and the creditor is agreeing to delete it from your record.


If the account has reached collections, the original creditor will have it listed as a “charge off”, however this does not mean that you are out of the clear. You still owe the debt.


You want to make sure you know who you owe so when you negotiate the deletion, you will have the right correspondence with the right debtors.


Make sure when you get to this process, you get a written confirmation of the amount you agreed to pay, and that a deletion will occur once you have paid the agreed upon amount.


Some may wonder, Should I pay my collection account?


If the debt is not paid and you are trying to purchase a home, I would suggest that you pay your collections. Underwritings see collections as a red flag and this may get your home loan denied.


Check out these stories: “Want To Buy A Home? 3 Things You Need to Know!” and “Waiting To Purchase A Home? 3 Things To Start Doing Now!”



Ask for goodwill deletion

Young lady is thinking about how she will compose a goodwill deletion letter to creditors.
Collection companies are not obligated to grant this type of deletion, but asking is worth a shot.

If the collection has been paid, yet you still see it as a negative remark on your credit report, you can ask for a goodwill deletion.

You can do this by mail, phone, or email. Although they are not obligated to remove the paid collection, I have found through personal experience they are willing to help you.

Sample conversation:


This template can be used for any form of communication you choose.

Wait for the fall off!


The last thing you could do is wait for the collection account to fall off your credit report. This will take 7 years.

Now, this still doesn’t mean you shouldn’t pay it, like you’ve heard so many others tell you.


A paid collection is always better than an unpaid collection. Because, remember, although it is no longer affecting your credit score after the 7 year period, it is still on your credit report.

If you're trying to purchase a home, you have a better chance with a paid collection than with an unpaid collection.


If the creditors are not willing to work with you and remove the paid collection, the underwriters will simply ask you to explain the remark and you could still have a better chance of being approved for your home loan.

Major Take Away!


Paid collection is always better than an unpaid collection, especially if you are trying to purchase a home.


If you have a paid collection remark on your credit and you want to have it removed following these 5 simple steps will help.


Happy credit repairing! You are definitely on your way to have a better relationship with your finances.


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