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A late payment here or there can happen, but if you fall significantly behind on any of your bills or debt payments, like utility bills, loans, or credit cards, the lender may send your account to collections. That could lead to a derogatory mark on your credit report, which can linger for years.

Bad credit could make it more difficult to qualify for new loans or lines of credit or secure the best interest rates. The good news is that it’s possible to recover from credit score damage caused by collections. For example, you might be able to negotiate with the original creditor to settle a debt. If you’ve already paid the debt or believe the account in collections is an error, there are several actions you can take to remove it from your report altogether.

The Consumer Financial Protection Bureau (CFPB) encourages people to know their rights when it comes to debt collection. Let’s walk through the possible steps to remove collection accounts from your credit report, depending on your situation.

The impact of collection accounts on your credit report

Having one or more collection accounts on your credit reports can hurt your credit scores. That’s true whether the credit reporting agency’s information about the account comes from the original creditor or a debt collection agency.

Here are some of the consequences of having collections on a credit report:

  • Collection accounts can cost you points from your credit score, potentially putting you in the “bad credit” category.¹
  • Bad credit could make lenders reluctant to approve you for new loans or lines of credit.
  • If approved for new credit, you may pay substantially higher interest rates than a borrower with good to excellent credit.

Should you receive a letter from a creditor or debt collection agency requesting payment for a past-due account, you have the right to request verification of the debt. You can write a debt validation letter asking for written proof that the debt belongs to you.²

This won’t change your obligations to the creditor if the debt is yours, but it may buy you a little time to figure out how you want to handle the account going forward.

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How to find out what you have in collections

Removing collection activity from your credit report can help you reach credit goals like improving your score or qualifying for different types of loans. But how do you figure out what you have in collections, if anything?

Here are some tips for tracking down collection accounts.

  • Check collection notices. If you’re receiving phone calls or notices in the mail about past due bills or missed payments, that’s a hint that your accounts are delinquent, and the three major credit bureaus have been or are soon to be informed. Any collection notices you receive should have information about the debt, including the amount owed and who is trying to collect.
  • Log in to your accounts. You can log in to check the status if you have online access to your credit accounts. If you attempt to log in at the original creditor’s website but can’t gain access, that could mean your account has been sent to a collection agency. You can contact the creditor to determine if the account has been sold and to whom.
  • Review your credit reports. Changes to your credit report can indicate a new collection account. You can get a free credit report through AnnualCreditReport.com. Once your account is created, you can review information about missed or late payments.

If you have any, your credit report should list whether the collection is a paid or unpaid debt, any balances owed, and the date the account went delinquent.

Removing collection accounts in four steps

If you’ve determined that you have delinquent accounts on your credit reports from missed payments, there are some possibilities for removing them altogether. The best approach depends on the specifics of the debt and your situation.

The most popular approaches include:

  • Disputing a collection: Used when there’s an error or inaccurate information on your credit report.
  • Requesting a goodwill deletion: Used when you’ve already paid the debt in full.
  • Writing a pay-for-delete letter: Used when the debt hasn’t been paid, but you’re willing to negotiate an agreement to have it removed.
  • Waiting for the collection to fall off: Used when you don’t pay the debt and just want to wait until it falls off.

Here’s a closer look at how each one works.

1. Dispute inaccurate collections

If you have inaccurate collection accounts on your credit report, the Fair Debt Collection Practices Act (FDCPA) gives you the right to dispute this information. Errors or inaccuracies on your credit report are more common than you think. For example, a collection established due to identity theft, an aged debt, or an account that you’ve already paid that’s not being accurately recorded on your credit.³

You’ll need to draft a dispute letter and address it to the credit bureau that’s reporting the information you believe is incorrect. Your dispute letter should include:

  • Your contact information
  • A list of each mistake with corresponding account numbers
  • An explanation of how the information is incorrect
  • A request for the information to be removed or corrected
  • A copy of your credit report with the inaccurate items highlighted

After submitting your dispute, a credit reporting company has 30 days to investigate your claim. If the credit bureau finds the information you submitted to be correct, it will remove the collection account from your report.⁴

Chime pro tip: Accurate information generally cannot be removed from a credit report by request, even when there’s a negative impact on your credit scores.⁵

2. Request a goodwill deletion

A “goodwill deletion” is simply a request to remove a collection account from your credit if the debt has been paid in full. Depending on who holds the account, you can request a goodwill deletion from a debt collection agency or the original lender.

Here’s how to make the request:

  • Check the size of the debt. Goodwill deletions are more common for smaller items. However, it’s possible to have bigger collection accounts removed in this way.
  • Draft a request for delete letter. To request a goodwill deletion, you’ll need to send a letter to the collector explaining your situation, including the reasoning as to why you’d like the collection removed.
  • Provide documentation if you have it. You can make your case for a goodwill deletion stronger if you have evidence to back it up. For example, if you had a debt go into collections because you lost your job unexpectedly you might provide a letter showing your approval for unemployment benefits as proof.

When does it make sense to ask for a goodwill deletion? You might consider it if:

  • You’re planning to apply for new credit. Maybe you’re about to make a big financial move like applying for a mortgage. If you can get a creditor to delete a collection account, that could help to reduce credit score damage.
  • You’ve experienced a hardship. You might also consider requesting a goodwill deletion if you’ve dealt with a crisis that caused you to miss a payment or your account to become delinquent. For example, this could work if you got sick or hurt and piled up medical bills as a result.

Remember, there’s no guarantee this will work but it may still be worth asking to see how your creditors respond. There are goodwill letter templates online that you can customize to detail the circumstances that lead you to fall behind.

3. Write a pay-for-delete letter

A pay-for-delete letter is a way to negotiate with a collection agency to remove a negative, unpaid item from your credit report. Collection agencies and creditors ultimately want to be paid for the debts you owe. Some agencies may be willing to remove information about your collection account if you agree to pay your debt in part or in full.⁶

This could work for:

Be aware that the collection agencies aren’t obligated to accept an agreement like this. If you negotiate with a pay-for-delete letter, get any agreement in writing (either paper or electronic) from the agency before making your payment. If this is the approach you’re looking to take, you can find pay-for-delete letter templates online to get started.

4. Wait for the account to fall off your report

If you owe collection debts and can’t convince the creditor to delete them from your report, your last option is to wait it out. Although this means the collection will continue to impact your credit score, negative information will go away after enough time has passed.

Waiting might not be an instant fix, but it’s a successful tactic. But just because a debt is no longer on your credit report, that doesn’t always mean you won’t still have to pay it.

If the debt due isn’t past your state’s statute of limitations or the time frame when a creditor can sue you for a debt, the creditor still has the right to try and collect payment from you.

It may depend on the type of debt, but most states dictate that the creditor or lender has between three to six years to request payment for a debt after it’s been sent to collections. It’s important to understand your responsibility to pay old debts based on where you live.⁷

Chime pro tip: Check for credit monitoring services that file disputes on your behalf.

If you already use a consumer credit monitoring service, check to see if they offer additional services for disputing collections on your behalf. Some companies will do the legwork for you while you focus on other things to improve your credit.

How long does a collection stay on your credit report?

Negative information, including late payment history and collections, stays on your credit report for seven years after the delinquency date, according to the Fair Credit Reporting Act (FCRA). After that amount of time, they must be deleted from your credit report and will no longer impact your credit score.⁸

That’s good to know if you have negative but accurate information on your credit reports. But remember, every time you make a payment on your collection account, that timer resets.

If you intend to settle a debt or request a pay-for-delete arrangement, it’s wise to do so as quickly as possible. Even if you pay it in full, it’s still considered a negative account and will stay on your credit report as a paid collection account for those seven years.

Removing collections can put you on the path to better credit

Getting collection agencies and lenders to remove collection accounts from your credit reports can be tricky, but it’s still worth the effort to improve your credit score. The better your credit, the easier it may be to borrow down the line, and the more money you’ll save in interest.

Need more help getting your finances on track? Learn how to repair your credit in a few steps.

FAQs

How long will it take after paying a collection for it to be removed from my report?

After you pay a collection account, it takes some time for it to be fully removed from your credit report. Even if your balance is paid in full today, it won’t be reflected on your credit report and credit score until your lender reports the payment. This can take one to two billing cycles since lenders generally report activity monthly to credit reporting agencies.

How do collection reports impact your credit score?

Delinquent accounts cause some serious damage to your credit score, but how much damage depends on the credit scoring model you use. It also depends on whether the collection account is paid or unpaid. For example, some newer credit scoring models will either ignore paid collections accounts or weigh them less heavily. In the newest versions of FICO® and VantageScore®, paid collections don’t hurt your score, but unpaid collections do. Collections also fall under payment history, and, being that it makes up 35% of your score, it’s the biggest factor driving your FICO rating.⁹

Will my credit score increase if a collection account is removed?

Your credit score may or may not improve when you pay off a debt that’s in collections. Again, some newer scoring models take this into account, but older ones don’t. You can monitor your score before and after paying your debt to see if it changes or improves. As mentioned above, payment history accounts for 35% of your FICO® Score, so your score might go up if a collection account is removed. But how much it increases will depend on other items listed on your credit report, such as credit utilization and payment history.⁹

How long does it take before a bill goes to collections?

There’s no set period for a creditor or lender to send your debt to collections. Once you miss a payment, your account is considered delinquent, but most creditors will try to contact you several times to work with you and bring your account back into good standing before they send it to collections. The more you communicate with your creditors, the better your chances are of keeping your account out of collections and retaining your good credit standing.

Should I hire a credit repair company?

The Fair Debt Collection Practices Act outlines steps you can take to repair your credit, but if it seems overwhelming, you might consider hiring a credit repair company. They can request debt validation, file your disputes, and negotiate with debt collectors, saving you extra stress.

But it’s good to know that they can’t do anything that you can’t do to remove negative marks on your credit report yourself. Weigh the pros and cons of a credit repair service before committing to hiring a professional. Beware of scammers who ask you to pay before they’ve given you a service.

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¹ Information from myFICO's How Do Collections Affect Your Credit? as of January 10, 2024: https://www.myfico.com/credit-education/faq/negative-reasons/collections-affect-credit

² Information from the Consumer Financial Protection Bureau's What information does a debt collector have to give me about a debt they’re trying to collect from me? as of January 10, 2024: https://www.consumerfinance.gov/ask-cfpb/what-information-does-a-debt-collector-have-to-give-me-about-the-debt-en-331/

³ Information from the Federal Trade Commission's Fair Debt Collection Practices Act as of January 10, 2024: https://www.ftc.gov/legal-library/browse/rules/fair-debt-collection-practices-act-text

⁴ Information from the Consumer Financial Protection Bureau's How do I dispute an error on my credit report? as of January 10, 2024: https://www.consumerfinance.gov/ask-cfpb/how-do-i-dispute-an-error-on-my-credit-report-en-314/

⁵ Information from the Consumer Financial Protection Bureau's Is it possible to remove accurate, negative information from my credit report? as of January 10, 2024: https://www.consumerfinance.gov/ask-cfpb/is-it-possible-to-remove-accurate-negative-information-from-my-credit-report-en-1249/

⁶ Information from the Consumer Financial Protection Bureau's Market Snapshot: An Update on Third-Party Debt Collections Tradelines Reporting as of January 10, 2024: https://files.consumerfinance.gov/f/documents/cfpb_market-snapshot-third-party-debt-collections-tradelines-reporting_2023-02.pdf

⁷ Information from the Consumer Financial Protection Bureau's Can debt collectors collect a debt that's several years old? as of January 10, 2024: https://www.consumerfinance.gov/ask-cfpb/can-debt-collectors-collect-a-debt-thats-several-years-old-en-1423/

⁸ Information from the Federal Trade Commission's Fair Credit Reporting Act as of January 10, 2024: https://www.ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act

⁹ Information from myFICO's What's in my FICO scores? as of January 10, 2024: https://www.myfico.com/credit-education/whats-in-your-credit-score

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