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Smart Money

How to Remove Collections From Your Credit Report

If you look at your credit report and find an account in collections, it's likely your credit score is being negatively impacted by that debt. Explore the options you have when looking to remove a collection from your credit report.

Rachel Velez • August 30, 2022

In This Article

  1. How to find out what you have in collections
  2. Consider your options
  3. How long does a collection stay on your credit report?
  4. FAQs
  5. Final thoughts

A late payment here or there can happen, but if you really fall behind on any of your bills or debt payments, such as utility bills, loans, or credit cards, it’s possible the lender will send your account to collections. This leads to a derogatory mark that could remain on your credit report for years. 

The good news is, even though this can cause significant damage to your credit score, the impact can be lessened over time or even reversed in some cases. For example, you can negotiate with your creditor or settle a debt completely after a certain period of time. And 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 altogether from your credit report. 

Let’s walk through the possible steps to remove collection accounts from your credit report, depending on your situation.

How to find out what you have in collections

Getting collection activity removed 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?

Well, if you start to get calls or notices in the mail about bills that are past due or payments missed, it might mean these accounts are delinquent and the 3 major credit bureaus have been or are soon to be informed. If the debt hasn’t been reported yet, you can call the creditor directly to try to work out an arrangement that prevents that from happening. 

But, if you believe it’s been sent to collections, then the first thing to do is review your credit report. It’s easy to access your credit report for free from AnnualCreditReport.com. From there, you can create a free account, then go to the “Credit history and accounts” section. This is where you’ll find information about any 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. Then compare the details of the collection listed on your credit report with your records for that particular account. If you haven’t kept records of your own, log into the account in question to view your payment history. 

 

Consider your options

Once you have all the details straight, you can then decide which approach will work best for you to remove a collection from your credit report. 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 at all and just want to wait until it falls off

Here are 4 action plans for each of your options if you choose to attempt to remove collection accounts found on your report.

1. Dispute inaccurate collections

If you have inaccurate collection accounts on your credit report, the Fair Credit Reporting Act gives you the right to dispute this information with the 3 credit bureaus or the creditor. An error on your credit report can be more common than you think, such as a collection that was 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. 

But how do you dispute these collections on your credit report? You can send a dispute letter or use the dispute form found on each credit bureau’s website.

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 you submit your dispute, a credit reporting company has 30 days to look into your claim. If the credit bureau finds the information you submitted to be correct, it will remove the collection account from your report. However, if it finds through investigations that it is incorrect, the collection account will stay on your report.

2. Request a goodwill deletion

You can request a goodwill deletion from a collection agency or the original lender if you’ve already paid the debt in full. Essentially, you’ll use your goodwill letter as an opportunity to ask for the negative item to be removed from your credit report, while explaining that the debt has been paid. Goodwill deletions are more common for smaller items, however, it’s possible to have bigger collection accounts removed in this way.

To do this, you’ll send a letter to the collector explaining your situation, including the reasoning as to why you’d like the collection removed. It’s never a guarantee that this will get the job done, but it doesn’t hurt to ask, especially if you’re about to make a big financial move like applying for a mortgage. If the creditor removes it, your credit record will still show the late payments that led to the collection action initially, but removing the collection itself helps reduce the impact of credit score damage.

You might also consider requesting a goodwill deletion if you’ve dealt with a crisis, such as a  medical emergency or traumatic life event, that caused you to miss a payment or your account to become delinquent. There are goodwill letter templates online to help you start the process. Also, remember to customize the letter to your circumstances for the best possible chance of having the collection removed.

3. Write a pay-for-delete letter

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

Be aware that the collection agencies aren’t obligated to accept an agreement like this, but if you do negotiate with a pay-for-delete letter, make sure to 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, there’re pay-for-delete letter templates online that can help you get started.

4. Wait for the account to fall off your report

If your collection is accurately reflecting you owe a debt and you can’t convince the creditor to delete it from your report, your last option is to wait it out. Although this means the collection will continue to impact your credit score, it will go away after a specific period of time. Waiting might not be an instant fix, but it’s a successful tactic. Be aware, however, that 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 is able to 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 3 to 6 years to request payment for a debt after it’s been sent to collections. As mentioned, each state has its own laws regarding the statute of limitation on debt, so make sure you understand your responsibility to pay old debts based on where you live.

Check for credit monitoring services that file disputes on your behalf

If you already use a credit monitoring service, check to see if they offer additional services for disputing collections on your behalf. Sometimes a company can 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?

Collections stay on your credit report for 7 years after the date of delinquency, according to the Fair Credit Reporting Act. After that amount of time, they must be deleted from your credit report and will no longer impact your credit score. But remember, every time you make a payment on your collection account, that timer resets, so if you do intend to settle a debt, 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 that 7-year period.

FAQs

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

After you pay a collection, 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 consumer reporting agencies (CRAs).

How do collection reports impact your credit score?

A collection can 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. 

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. 

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

There’s no set time 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. 

Should I hire a credit repair company?

If the removal process above feels too complex, think about reaching out to a credit repair company. They can 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 will ask you to pay before they’ve given you a service.

Final thoughts

It can be tricky to get collection agencies and lenders to remove collection accounts from your credit reports, but it’s still worth the effort to improve your credit score. When dealing with debt collections, it’s important to keep track of your credit report and scores. Although restoring your credit score after you’ve had accounts in collections can require a little extra time and effort,  with dedication and managing your finances responsibly, it’s possible to rebuild your credit and strengthen your personal finances.

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