How to Remove Collections from Your Credit Report
WHAT YOU'LL LEARN
Tips for verifying debts are indeed yours.
How to ask for deletions.
Learn how to check your credit reports to be sure they’re up to date.
WHAT YOU'LL LEARN
Tips for verifying debts are indeed yours.
How to ask for deletions.
Learn how to check your credit reports to be sure they’re up to date.
We’ve all been there – getting a collections letter in the mail. Maybe you had a tough few months last year and couldn’t manage to pay off that new fridge. You may be in a better financial position now, but those collections have turned up on your credit report, affecting your ability to borrow future funds.
But we’ve got ways to go about getting those dings off your record. Read on to find out!
So, What’s the Big Deal?
It may seem like that $500 you owe on a credit card is not much, but it can have a dramatic, waterfall-like effect on your credit.
A collection on your credit reports (yes, “reports” plural – there are three credit bureaus, Equifax, Experian, and Transunion) means a creditor has passed on an unpaid debt to a third-party collections agency, usually after it’s gone unpaid for 90 days. This causes multiple hits to your credit:
Because consistent payments is worth roughly 35% of your credit score, your score takes a dramatic plunge.
You look unworthy as a borrower for future money.
Whether you pay back the debt or not, the collection will remain on your credit report for seven years.
Removing the collection completely is the only way to raise your score again.
Step 1: Ask for Proof
Mistakes happen. The first step to removing a collection is asking the debt collector for a validation letter to prove the debt is yours. If they can’t offer detailed information or there are errors, you can dispute the debt with the credit bureaus.
Credit bureaus do not report medical debt under $500 and don't report paid medical collections at all.
Step 2: Check Your Report for Inaccuracies
Take a look at your report overall for mistakes— creditors and collections agencies can make goofs, even mislabeling someone else’s debt as yours.
Gather all your evidence and submit a dispute to all three credit bureaus. They are required to look into your case and remove the collection if its accuracy can’t be proven within a certain timeframe.
Step 3: Write a Goodwill Letter
If your credit history is otherwise solid, you can try to get the original creditor or collection agency to remove the debt as – yes – a favor, the “goodwill deletion.” But you’ll probably have to pay the collection account off first.
Step 4: Ask for a Pay-for-Delete Agreement
Believe it or not, you can try to convince the agency to allow a "pay-for-delete" agreement, permitting you to pay the debt in full or negotiate an amount to pay so they remove the entry from your credit report.
However, be sure you don’t make payments on this agreement without clearly stated terms. And be mindful that these are not legal documents; the debt collector does not have to delete the debt even if you pay it. And even if the collector completes the deletion, that negative mark may still show up on your credit reports, while you simply have to wait for it to fall off so you can rebuild a positive history.
Keeping Collections Off the Report in the First Place
The best way to avoid collections is to be mindful of your correspondence and accounts, even if payment is difficult. For example:
Make sure you are scanning your U.S. mail, email, and phone messages so you do not miss any correspondence from these companies.
Respond immediately. Contacting the agency promptly can help you avoid having a collection reported on your credit.
Arrange a payment plan first and ensure all payments are made on time.
Budgeting is also key. Start by tracking all your income and expenses to understand where your money is going. This helps identify areas where you can cut back and allocate more towards debt repayment. Remember, a well-structured budget is your best defense against financial uncertainty and a key step in maintaining a healthy credit score.
If you maintain great communication with the original creditor, you might be able to prevent them from sending your debt to collections in the first place. You can try proposing a repayment plan or looking into a trustworthy non-profit credit counseling service to help. They can contact creditors to negotiate a debt management plan. However, not all credit counseling services are alike (or legit). Ask Atlantic Bay for help finding a reliable counselor.
Atlantic Bay is always here to help you with your credit questions – reach out today!