What is a pay-for-delete letter? (2024)

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• Pay-for-delete letters ask debt collectors to remove negative marks on credit reports in exchange for debt repayment.
• When writing a pay-for-delete letter, include a response deadline for debt collectors.
• Pay-for-delete letters don't have a legal foundation, so debt collectors aren't obligated to follow through on their promises.

An unpaid bill on your credit report can cause a severe credit score drop. In most cases, you'll have to wait for any accurately reported delinquencies on your credit report to age off your credit report, which will take seven years.

However, you may consider sending a pay-for-delete letter to your creditor or debt collector. This is the last resort for your credit score before you accept a negative mark on your credit report for the next seven years. While a pay-for-delete letter can save your credit score, it's a less-than-ideal option that comes with several pitfalls.

What is a pay-for-delete letter?

On its face, a pay-for-delete letter is simple. These "are written requests sent to creditors or collection agencies to try to remove negative information from a person's credit report, in exchange for payment," says Tiffany Cross, executive vice president of national sales at CredEvolv.

If your debt collector agrees to the arrangement, when you pay the debt collector, they'll report the mark as a mistake to the credit bureaus, removing the collections account on your credit report.

According to Lamine Zarrad, CEO and founder of credit-building tool StellarFi, you'll want to consider writing one if you have accurate debt listed on your credit report (always confirm all marks are correct before paying anything), have the funds to pay at least a good chunk of it, and want to improve your financial standing. The letter will detail precisely how much of the debt, if not all, you're willing to pay to a collector in order to get the negative mark removed from their credit report.

It's important to note that paid collections affects your credit scores in different ways depending on which credit scoring algorithm you're using. VantageScore 3.0 and 4.0 don't incorporate any paid collections into your credit score, so even if a debt collector removed the account off your credit report, your credit score wouldn't change. FICO 9 and 10 also don't consider paid collections accounts.

However, FICO 8, one of the most widely used credit scoring models among creditors, factors paid collections into its credit score calculations, so a successful pay-for-delete agreement will improve your FICO 8 credit score.

Regardless of how a collections account affects your credit score, a debt in collections, even one that has already been paid, will remain on your credit report for seven years. A lender who pulls your credit report will be able to see the account, which may be cause for concern when they're considering your credit application.

What to include in a pay-for-delete letter

Once you decide to write a pay-for-delete letter, it's easy to end up staring at that blank page, unsure where to start. While each letter will be slightly different, there are vital points you want to be sure to include. "Effectively, the letter should contain the terms you are proposing, including what you're willing to settle the debt for in exchange for the collection agency removing the past due account reference from any and all credit reporting agencies," explains Rick Eicheldinger, a certified financial planner and the director of financial planning at Facet.

According to the financial experts we spoke with, here's what to put in a pay-for-delete letter:

• Your complete contact information, including account numbers
• An explanation of your request to pay in exchange for deletion
• A clear outline of the payment amount offered and in what time frame
• The deadline for the creditor to respond
• A request, if agreed upon, for written confirmation rather than a phone call

Providing all this information in your initial letter allows the creditor to respond immediately instead of requiring a back-and-forth to learn more about your situation. Zarrad also recommends sending the letter through certified mail for proof of delivery.

Pay-for-delete letter example

Here's an example to make it clear what to include and one way to format it.

Dear (name of representative),

I am (your full name), and I have an account with you (account number). I am reaching out today with a request to pay (dollar amount) in exchange for removing the debt from all credit reporting agencies. If an agreement is reached, I will pay this amount by (date of payment).

Please respond by (date requested) with written confirmation if we can move forward with this arrangement. If I do not hear from you by that point, then I will assume you have declined the offer.

Thank you for your time.

Sincerely,

(Your full name)

(Your phone number)

(Your account number)

(Your address)

You'll want to get their response and agreement in writing. You may also want to use a delivery service that verifies shipping and delivery.

Some credit repair companies will provide you with letter templates you can send to debt collectors, such as debt verification letters, dispute letters, and pay-for-delete letters. The CFPB also provides letter templates you can use to communicate with your debt collector.

Consequences of pay-for-delete letters

According to Eicheldinger, not only might a debt collector not accept the agreement, but they might agree and then not wipe your records after receiving their money. "In the best of cases, the debt collection agency removes the account, and it drops off of your credit reporting," he says. "They could also disregard the agreement, take your money, and leave the report as is."

Though getting the arrangement in writing might help, a pay-for-delete arrangement is unlikely to be held up as a legally binding agreement, explains Eicheldinger. To that end, some collectors might claim that removing any information is in violation of the Fair Credit Reporting Act and it's their responsibility to report all debts. This isn't to say the request is illegal by any means, but its likelihood and consequences can vary across jurisdictions, adds Zarrad.

"The practice of pay-for-delete has also generated much scrutiny and controversy within the credit industry, as it may be seen as ethically questionable or even against the policies of credit reporting agencies," adds Cross.Additionally, even if a debt collector follows through on the pay-for-delete letter, your debt may reappear on your credit report.

Anyone who has already paid off a debt that's still showing up on their credit report can instead attempt a goodwill letter. This is a request to a creditor asking them to remove your negative mark since the debt has been paid. Again, this is up to your creditor. A goodwill letter has a higher probability of working if you have an otherwise pristine history of paying loans on time.

Pay-for-delete letter frequently asked questions