How to Remove Collections from Your Credit Report: Why Are They on My Credit Report?
October 17, 2023 | 3 min read
Written By:
Credit Saint
Credit Saint
Staff Writer
With years of experience and a passion for helping clients achieve their financial goals, our team is committed to guiding you on your journey to credit recovery and financial success.
Reviewed By:
Ashley Davison
Ashley Davison
Editor
Ashley is currently the Chief Compliance Officer for Credit Saint, previously the Chief Operating Officer. Ashley got into the Financial world by working as a Logistics Coordinator at Ernst & Young. Coming from a previous career in education, she is eager to teach the world every...
Having a collection on your credit report can be distressing. Collections can significantly impact your credit score, making it challenging to secure loans or get competitive interest rates. This guide aims to help you understand collections, how they impact you, and steps to potentially remove them.
When you have an unpaid debt that becomes significantly past due, the original creditor might sell that debt to a collection agency. Collections are typically reported to credit bureaus, appearing as negative entries on your credit report. These entries can include details about the unpaid debt, such as the original amount owed, the name of the creditor, and the status of the collection account.
Collections are a sign of non-payment and can considerably decrease your credit score. Collections signal to potential lenders that you’ve failed to meet your financial obligations, raising concerns about your creditworthiness. This can result in higher interest rates, difficulty securing loans or credit cards, and even impact your ability to rent a home or land a job. Moreover, they can stay on your report for seven years, regardless of whether you pay the debt or not.
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Steps to Remove Collections from Your Credit Report
Verify the Collection: Before taking any action, ensure the collection is accurate. Obtain your credit reports from the major bureaus – Experian, Equifax, and TransUnion – and verify the listed collections.
Dispute Inaccuracies: If you find any discrepancies, such as a collection that doesn’t belong to you, file a dispute with the respective credit bureau. They’re obligated to investigate and respond within 30 days.
Negotiate a “Pay-for-Delete”: Some collection agencies might agree to remove the collection entry from your credit report if you pay the debt. Ensure to get this agreement in writing.
Settle the Debt: If “pay-for-delete” isn’t an option, consider paying off the collection. While this doesn’t remove it from your report, it will change its status to “paid,” which looks better to future creditors.
Goodwill Deletion Request: If you’ve paid the collection, you can write a goodwill letter to the collection agency. In it, explain your past financial hardships and request a removal out of goodwill.
Wait it Out: Collections will naturally fall off your credit report after seven years from the date of the original delinquency.
Does paying off a collection remove it from your credit report?
No, but it changes its status to “paid.” This looks better than an outstanding collection.
How much does a collection impact my credit score?
The impact varies based on the rest of your credit profile. Newer collections have a more significant effect than older ones.
Can I remove a legitimate collection from my report?
It’s challenging, but strategies like “pay-for-delete” or goodwill deletion requests can occasionally work.
How long does a paid collection stay on your report?
A collection, whether paid or unpaid, can remain on your report for up to seven years from the date of the original delinquency.
Bottom Line
While removing collections can be a complex task, it’s essential for maintaining good credit health. Ensure to address collections head-on, either by challenging inaccuracies, negotiating with collection agencies, or simply letting them expire over time. By being proactive, you pave the way for a brighter financial future.
Reviewed By:
Ashley Davison
Editor
Ashley is currently the Chief Compliance Officer for Credit Saint, previously the Chief Operating Officer. Ashley got into the Financial world by working as a Logistics Coordinator at Ernst & Young. Coming from a previous career in education, she is eager to teach the world everything she knows and learn everything that she doesn’t! Ashley is a FICO® certified professional, a Board Certified Credit Consultant, a Certified Credit Score Consultant with the Credit Consultants Association of America, UDAAP certified, and holds a Fair Credit Reporting Act (FCRA) Compliance Certificate.
