You can remove collection accounts from your credit report by disputing inaccuracies, asking for goodwill deletions, or requesting a pay for delete agreement.
Collection accounts are bad for your credit score. These accounts can make it harder to get approved for new credit since they stay on your credit report for up to seven years. That’s why learning how to remove collections from your credit report can help you clean up your credit history and open more financial doors in the future.
Keep reading to learn how collection accounts impact your credit, how to remove inaccurate and paid collection accounts, and when to consider hiring a credit repair company.
In This Piece:
- How Collection Accounts Impact Your Credit
- How to Remove Inaccurate Collection Information
- How to Remove Paid Collection Accounts
- When Should You Use a Pay for Delete Letter?
- FAQ
- Consider Hiring a Credit Repair Company
How Collection Accounts Impact Your Credit
Collection accounts have a significantly damaging impact on your credit score because they’re negative marks that indicate to lenders you may not pay your bills on time—or ever.
When a lender doesn’t receive payments for a line of credit, like a credit card or personal loan, they may choose to eventually sell that credit to a debt collection agency to get some of their money back. That line of credit will then be reported to the credit reporting bureaus as a collection account, and the debt collection agency will try to collect that debt for themselves.
So if you have a debt in collections, your credit score has likely taken a dip. Low credit scores make it difficult to get favorable rates and terms on new lines of credit—if you’re approved at all.
How to Remove Inaccurate Collection Information from Your Credit Report
Before we get into the nitty-gritty, we need to level with you. Collection accounts aren’t easy to remove. Before you proceed with an action plan, make sure your expectations are realistic.
If you have a lot of inaccurate collection accounts on your report, you might need help from a credit repair firm like Lexington Law Firm. Credit repair companies know how to navigate credit bureau territory, and they can help consumers understand how to handle tricky situations.
But if you’re committed to a DIY approach to addressing collection items, the following steps may help you clear up your credit profile.
1. Review Your Credit Report
Obtain copies of your credit reports from all three credit bureaus—Equifax®, Experian®, and TransUnion®. Each credit bureau has different information about you, so if you challenge an unsubstantiated collection account on all your credit reports, you’ll have to create disputes with each bureau.
You’re typically entitled to one free copy of your credit report per bureau each year. To get your credit reports, head to AnnualCreditReport.com. You’ll be able to view all the information on file about you at each agency—but you won’t see your credit scores. To see a quick credit snapshot and your informational credit score, sign up for Credit.com’s free Credit Report Card, too.
Review the items on your credit report for accuracy, and ask yourself the following questions:
- Do you recognize the listed lenders?
- Does your account information seem accurate?
- Are all the items on your report familiar to you?
- If you fell behind with payments on an account, when did it happen?
With that information in hand, you’ll be ready to make your next move.
2. Identify Errors
Compare your credit reports to your financial records, like bank statements, and verify these details:
- Account numbers and identity information: Make sure account numbers match your personal records and that your name, address, and contact information are accurate.
- Account balances: Check that your current balances and credit limits are accurate.
- Account status: Ensure account statuses are accurate—check for closed accounts that are reported open, paid accounts that are reported unpaid, etc.
- Delinquency dates: Check that the original delinquency date (or when the account first became delinquent) is accurate to ensure old accounts aren’t mistakenly being reported.
If you notice any errors on your reports, you can challenge the accuracy of the errors with the credit bureaus.
3. Challenge Inaccuracies
You’ll treat disputes differently depending on where the error originated.
If the credit bureau made an error:
By law, credit reports should only contain accurate and complete information. Therefore, if any of the information you see on your credit report is inaccurate or incomplete, like a paid account that shows as unpaid, you have the right to challenge the accuracy of that item.
You can dispute inaccuracies online or by sending a letter. If you choose the online route, sign up for a free account with each credit bureau and follow their process for filing an online dispute.
If you choose to send a letter, include the following:
- A copy of your credit report with the inaccurate information circled
- Identifying information about the inaccurate account, including the account number
- Why the information is inaccurate
- What you want the credit bureau to do (remove the information or edit it for accuracy)
- Any backup documentation that illustrates you’re correct in your dispute
Once a credit bureau receives a challenge, it has between 30 and 45 days to investigate and confirm—or correct—the information it holds on file about you.
If the debt collector made an error:
If you suspect the debt collection agency made a mistake, like if you see a debt you don’t recognize, you’ll need to confirm the debt belongs to you.
The Fair Debt Collection Practices Act legally requires debt collectors to send you a debt validation letter with information about what the debt is, how much you owe and to whom, and the payment deadline. If you never received a debt validation letter or you believe the debt is an error, you can request more information. Do so as soon as you can—within 30 days of a debt collector’s first contact with you, if possible.
Request the following from the debt collector via certified mail:
- The amount and age of the alleged debt: Ask for a copy of the last billing statement sent by the original creditor, the amount of debt when the collector obtained it, and if there have been any payments or reductions since the original billing statement.
- Why they think you owe the debt and who you owe it to: Ask for account numbers and the name and address of the original creditor and for documentation verifying that you are responsible for paying.
- Debt collection authority: Ask for proof that the debt collection agency is legally licensed to collect the debt in your state.
While the debt collector is not legally required to provide all the information you request, they do have to respond.
4. Check Your Credit Report
As we mentioned earlier, credit bureaus have 30 to 45 days from receipt to investigate a dispute and five business days to notify you of the investigation results.
If the investigation concludes that the information on your credit report was inaccurate, the credit bureau involved will correct the error and send you a copy of your updated credit report.
On the other hand, if the credit reporting agency determines that there are no errors, they’ll take no further action and your credit report will remain the same. You always have the right to file another dispute.
How to Remove Paid Collection Accounts From Your Credit Report
Remember that if a collection account on your credit report is accurate and you pay it off, it won’t just disappear. It will generally stay on your credit report for up to seven years, though lenders will view it more favorably than an unpaid collection account. To completely remove an item, you’ll have to negotiate with the debt collection agency and ask for a goodwill removal. Here’s how to do it.
1. Verify You’ve Paid the Debt
Review payment documentation or correspondence with the credit reporting agencies that confirm you’ve paid off the debt. You can also contact the original creditor to get this information.
2. Ask for Goodwill Deletions
If you have an excellent credit history, you may be able to get the original creditor or collection agency to remove the derogatory mark as a favor or act of “goodwill.” You’ll generally have to pay the collection account off first, though, if you haven’t already done so.
If you have an otherwise blemish-free credit history, go ahead and ask the collection agency for a goodwill deletion. Removal after payment might be against their rules—but goodwill deletions might not be, and it never hurts to ask. You can find goodwill letter templates online to help you communicate with your lender.
3. Don’t Be Afraid to Wait and Check Back
Waiting might not be an instant fix, but it’s usually a successful tactic. After seven years, most collection accounts fall off your credit report—so if you’re closing in on seven years, just hang on. The impact on your credit is probably already lessened. After the collection account disappears, your credit score might improve. Make sure you are practicing good credit habits in the meantime.
When Should You Use a Pay for Delete Letter?
While it’s a long shot, you may be able to negotiate with the collection agency to have negative information removed from your credit report if you agree to pay the debt via a pay for delete letter.
Collection agencies ultimately want to be paid for the debts they’re trying to collect, so some agencies may be willing to remove the collection account from your report in exchange for payment.
Here’s how to remove paid collections from your credit report—or at least try to do so:
- Send a letter to the debt collection agency or ask via phone for this option.
- If the agency agrees, get the agreement in writing.
- Pay the debt.
- Follow up to make sure the debt is removed from your report.
Be sure to get any agreement in writing before making a payment. Also, note that collection agencies are not obligated to respond to or cooperate with a pay for delete agreement.
FAQ
Still have questions about how to remove collections from credit reports? We’ve answered some frequently asked questions below.
How Long Does It Take for a Paid Collection to Come off Your Credit Report?
Without any help from your debtors to get them removed sooner, collection accounts can show up on your credit reports for about seven years after the original delinquency date. Payments that are 30 or 60 days late won’t generally affect your credit score as much as payments that are more than 90 days past due. If possible, catch up with your payments within a month or two—and certainly, before your account goes to collections.
What Does It Mean to “Go Into Collections?”
If you find out that your debt has gone into collections, it can mean one of several things:
- Your creditor may have moved the debt from the regular billing department to an internal collections department. This escalation means the creditor may take further action to collect the debt.
- Your creditor may have hired a third party to collect its old debts and sent your account to them. The creditor still is overseeing the effort, but the third party is handling the collection activity.
- Your creditor may have sold the debt to a debt collection agency.
How Does Debt End Up in Collections?
Debt ends up in collections when you fail to pay the debt as agreed. This can happen when you don’t make payments for a period of time. Generally, missing a single payment and catching up won’t mean your debt ends up in collections. Most lenders wait until you’re several months behind before taking action.
Debt also can end up in collections by mistake. Typos, paperwork issues, or lost payments could lead to your debt ending up in collections or a collection being listed on your credit report. This is why it’s important to regularly keep an eye on your credit reports.
Can Paying Off Collections Raise Your Credit Score?
With most credit scoring models, no, paying off collection accounts will not increase your credit score and the items will not drop off your credit reports. However, certain credit scoring models, like FICO Score 9 and VantageScore 3.0, ignore collection accounts with a balance of zero. When one of these models is used, you will benefit from having paid off your collection account.
If you pay off a collection account and you can’t get it removed, don’t despair. The older the account gets, the less it’ll affect your score—and after seven years, it’ll likely vanish.
Consider Hiring a Credit Repair Company
Learning how to remove collections from your credit report can be difficult. If you’re not sure how to go about cleaning up your credit or you don’t have time to send and follow up on disputes, consider hiring a credit repair firm such as Lexington Law Firm. You can also sign up for ExtraCredit® to get easy access to your credit reports, 28 versions of your FICO score, and through the Restore It feature, get a discount on credit repair services.
John C. Heath, Attorney at Law, PC, dba Lexington Law Firm contracts with Progrexion Holdings, the owner of Credit.com, to provide administrative and business support. Credit.com may receive compensation if a subscriber signs up for Lexington Law Firm services.
