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So, you have downloaded a copy of your credit report and see “delinquent accounts” that are in collections. Some accounts you may remember, some accounts you may not, and some accounts may be the result of identity theft. No matter the reason they are on your report, you want to know how to remove those debt collections from your credit report.
Removing collections from your credit report will increase your credit score. The higher the credit score, the better chance of getting a bank loan with a good interest rate. I will review the different ways to remove collections from your credit report. Not all collections are treated the same and not all of them can be removed from your credit report.
What is a Delinquent Account?
According to Investopedia.com, a delinquent account is “a credit account on which a consumer has failed to make at least the minimum monthly payment by the due date. A delinquent account that is 30 days past due will spur the credit card company to start contacting the consumer about bringing the account current. If the account becomes 60 days delinquent, then the credit issuer will begin reporting the borrower as delinquent to credit reporting agencies with continued actions for collection.”
In other words, delinquent accounts are when you do not pay your bill. The creditor will then send your overdue account to a debt collection agency. When your account reached the debt collection agency it then gets added to your credit report. Overdue accounts on your credit report can cause a major drop in your credit score.
A credit score is just a score that tells other creditors how reliable you are about paying money back. A low credit score means you are a risky loan applicant who does not pay their bills on time. Payment history makes up the biggest part of calculating your credit score. So, let’s remove those collections from your credit report.
If it’s NOT your debt collection
If there is a debt collection on your credit report that is not yours, dispute it. You are not required to pay for any debt that is not yours. In order to dispute a collection on your credit report, you must have a current copy (within 30 days) of your credit report. Disputes can be made online, by phone, or by mail to any of the credit reporting agencies (Equifax, Experian, TransUnion).
You must provide evidence that the collection does not belong to you. When I had my identity stolen, I had to provide evidence that I was not in the city (or state) at the time when the charge was placed. I even had to provide photo ID of myself to prove that I was not the offender (she had plastic surgery using my identity, so her picture was in their file…long story for another post). Be prepared to show proof that you are not the owner of the debt collection.
If it IS your debt collection
If the debt collection is yours, then there are a few ways to remove the debt collection from your credit report. First, if it is an old debt collection, at least 7.5 years old, you can dispute it to have it removed, according to the Fair Credit Reporting Act (FCRA). Overdue accounts can only remain on your credit report for 7 years after the delinquency was first reported. You must have proof of the original delinquency date in order for it to be removed.
Second, negotiate to pay it off. Many times, collection agencies will accept a negotiated price for the debt if you can afford to pay it off right then and there. I recommend aiming for 50% of debt amount. Example, if the debt amount is $1,000, offer to pay $500 to have the account closed and later removed from your credit report.
Thirdly, you can always ask kindly. This is a long shot but what is the worst that can happen…nothing! Ask the debt collector if they can remove the debt collection from your credit report. This is called a Goodwill Deletion Request. Often, you may need to write a letter to the collection agency stating your story of why you are trying to increase your credit score and how their goodwill deletion will help you.
Lastly, pay it outright. When options 1 thru 3 fails, you must pay the balance to have the debt collection removed. Maybe try to negotiate a little more but there is still a chance that you must pay the complete balance.
When will the debt collection be removed from my credit report?
You did all you can to get the delinquent accounts closed, so the next question is when will these collections fall off my credit report? Unfortunately, these collection accounts could remain on your credit report for 7.5 years after the original delinquent date. BUT, these collections are CLOSED which means your credit score should start to improve.
Don’t let the time that it takes for the collection to completely fall off your report stop you from reaching your goal of increasing your credit score. I would like to say congratulations in taking charge of your financial life. It’s not easy and I don’t want to overlook your hard work.
Just curious, what financial goal are you looking to achieve when you increase your credit score? Leave your answer in the comments below.
