Can You Get a Debt Collection Account Off Your Credit Report?
Suffering through a tough financial patch — with the stresses of not being able to pay bills on time, juggling priorities like rent and utilities over other bills — is frustrating. But for many of us, the longer struggle can be the patience needed to see our credit scores bounce back, or the time it takes for late pays and collections that occurred a couple years back to finally drop from our credit reports.
Waiting for your credit scores to return to what they once were is, for most, a timeframe measured in years.
Some of us will have had some credit damage from paying bills late that only marginally impacted credit reports and scores. Several 30-day-late pays may show on your credit, but they were eventually brought current. You know the late pays are there, and will impact your credit score, but you set your mind to not make any large financing moves, and forget about your credit for a couple years.
You may have had to pay off accounts that went to debt collectors, or even resolve accounts that wound up in court. But you are not the type to dwell. Now that you’re able to pay all of your bills, and have survived the collections, you know you have to wait out the credit damage that occurred, and won’t obsess about it.
On the other hand, some of us will care just a little bit more concerned about our credit recovering than others, and often for good reasons. You may be looking to finance dependable transportation, or had to relocate for better job prospects and want to now purchase a home. Your credit may be in rough enough shape that you are denied credit, or find that the loan you can qualify for is likely to be set at much costlier interest rates.
And some of us just geek out on this type of thing, and want our credit repaired as rapidly as possible, even if you have no financing plans in the foreseeable future.
Conventional wisdom is that the passage of time is the primary way to heal your credit, and that is true. Most negative credit reporting will remain on your credit reports for up to 7.5 years from the date you first missed paying, say, a credit card that later landed with a debt collection company.
But is there anything that can be done to get collections and late pays off credit reports sooner? Let’s look at some possible options.
Disputing a Collection Account
You can dispute an item on your credit reports that you believe to be inaccurate, incomplete or out of date. Obviously you would dispute anything that is just flat-out not yours, like a collection account tied to an account you have never had, all the way to an address you have never lived at. And you can also dispute if you think the balance of a collection account is wrong (collection balances do tend to get inflated, and sometimes collectors lack the ability to prove how they are legitimately owed a larger amount than what you think it should be). Sometimes these balance disputes can result in a collection account being removed from your credit.
Disputes do result in removals and corrections to errors found on your credit reports. I recommend you send your disputes in writing, and use certified mail return receipt. Keep a copy of all communications you send, and those little green cards you get back in the mail, organized and in a safe place. You may need them later.
Paying Off or Settling Collection Accounts
Settling old bills that went to collections can help improve your ability to qualify for loans. These days, if you have unpaid collections on your credit reports, you may need to pay them in order to qualify for a home loan. Perhaps you are back on track and in better money shape now, and want to resolve those old debts.
Negotiating a lower payoff with bill collectors is fairly common. The savings you can achieve will vary from one person’s situation to the next and from one account to the next. I do recommend trying to get the best savings you can when resolving debts that are already showing as charged off and with debt collection companies on your credit reports. Paying full freight, or what are fully inflated old collection balances, can take longer the more accounts you have to save up to pay off, whereas negotiating lower payoffs allows you to resolve multiple debts much more quickly. And the result of either paying in full, or getting a debt collector to agree to accept less, results in the same thing – a zero balance owed updated to your credit reports.
Paid collections can briefly drop a credit score, depending on the one you are looking at (FICO scores factor in collection items whether or not they are paid, whereas a newer version of VantageScore will not factor in paid collection items), so be prepared to see that. Settling a collection account and any resulting credit score drop may not set you back at all when getting that home loan pushed through. But it could impact pricing and access to other credit products.
Pay for Delete and Good Will Removal Requests
There are some limited instances where you can contact your creditor, or a service provider you owe, but could no longer pay, and request that they remove any negative reporting in return for your full payment. The opportunities for something like this to work are few and far between. My experiences suggest you may have a shot with this strategy on unpaid medical and utility bills, but little else.
You may be tempted to write a letter to someone still reporting negative information to the credit bureaus even though you paid that account some time back. This is sometimes referred to as a good will letter. You are basically writing about your personal hardships and requesting the human being reading your letter to exhibit good will by ceasing to report any negative trade line. Here again you may find success with service providers and companies. But realize you are asking people to make exceptions to set business policies and internal job training. Positive outcomes from good will credit removal requests are just not common.
Pay for delete debt negotiation strategies, and good will requests, are a waste of time with debt collection agencies, and are counterproductive if you are hoping to strike a deal where you pay less than what you owe.
Debt collectors are often going to be a good customer of the credit reporting agencies, as these companies rely on credit reporting data as a collection tool. They have contracts with the credit bureaus and are not going to risk those relationships based on your good will request, or in order to get paid on your one account. And when you request credit report removal as a condition before you agree to pay, you telegraph you want or need something credit-related, which could lead to them holding out for more money in your negotiations. And ultimately, only the credit report update they are required to make already – that the account is now paid, and there is a zero balance due – is what will result.
If you’re dealing with collection items from your past, it’s important to check your credit reports to see what’s on them, and to determine what you need to work on. You can obtain your credit reports for free annually from AnnualCreditReport.com. You can also monitor your credit scores for free on Credit.com to track your progress and get a plan in place to improve them.
Finding the patience to wait for credit damage to run its course, and making good choices to rebuild your credit along the way, can be the last leg of what only feels like forever. Clearing any temporary money setbacks, or even adjusting appropriately, and settling in to a new income reality, can come with a sense of earned freedom. You survived, you are stable.
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