Credit Companies

How Can We Remove Collections from a Credit Report?

Quick Answer:

If the details of the collections account are unjust, incorrect, or can be proven, you can challenge it to see if they will be eliminated from your report.

You can file a dispute if you want to remove collections from your credit report. It is important to dispute it as the effect of a collections account can gravely affect your credit score.

If the collections is viable and just, you can strike a deal with the collection agencies to have it eliminated from your report.

Mentioned below are some of the options you have for the removal of collections from your credit report.

Option 1: File a Dispute with The Credit Bureau

Every individual is given the right to a just and correct report according to the Fair Credit Reporting Act (FCRA). Credit repair, which includes challenging unproven or incorrect information on your credit report, can be utilized to report a collection if it is incorrect in some way.

You will take these following steps to file a dispute with the credit bureau:

1.    Examine your credit report for errors. These errors can include double entries, miscalculated accounts, accounts that are not yours, wrong collection agency is reported, and the debts that should be eliminated from your report.

2.    Collect evidence regarding your error. You need to provide adequate documents for the credit bureaus to properly investigate your inaccuracy.

3.    Report the errors to the credit bureaus. You will send a letter to the credit bureaus with the appropriate documents as well as proof of identity and details of the dispute.

4.    Wait for the response of the credit bureaus. The credit bureaus are given 30 days to review and examine the errors and report the results back to you. They will communicate with the collection agencies to validate the error.

If the debt collection is unresponsive or is not able to find proof for the dispute to be such, then the detail will be eliminated from your credit report.

However, if the information is valid and there is proof, the collections will remain on your credit report.

You can then go for several options to remove the collections from your report of the credit bureaus have found it to be just and correctly addressed.

Option 2: Write a Pay-for-Delete Letter

A pay-for-delete letter is an agreement technique used to have a derogatory mark eliminated from your credit report in exchange for a payment.

Collection agencies are not required to agree to this. If they do accept it, ensure that you receive written evidence in regards to their agreement so that you can hold the collection firms accountable in the future.

Option 3: Ask for a Goodwill Deletion

This option is valid if you have good connections with your lender and can request them to remove the item for the sake of goodwill.

What Happens When a Debt Is Sent to Collections?

When a debt is sent off to collections, it indicates that the original lender will be pursuing the debt anymore. This generally happens after 180 days of missed payments. Normally, the creditor sells the account to a collection agency to reinstate some of their lost money.

Once a debt is sent off to collections, the firm then makes it a mission to contact you about the pending payment. If you make payments to your debt on time, then the collection agencies will not report the debt to the credit bureaus.

However, it will do you well to remember that if a collection agency comes in contact with you, you can assert your rights from the Fair Debt Collection Practices Act.

What Effect do Collections Have On My Credit Score?

According to Experian, a collections account on your credit report can severely affect your credit score and your credit history. Potential creditors view you as a financial risk, because you were unable to pay for so long that an agency had no other option than to send your case to collections, regardless of your situation at the time.

Anyone observing your credit will see you as a credit risk. It indicates to creditors that an individual is not to be trusted to make payments to their debts.

Can Paying Off Collections Remove It or Increase My Credit Score?

Only paying off a collections account will neither increase your credit score, nor will it remove the account from your credit report. Generally, a full payment to remove the collections account will make no changes to the time set for it to be eliminated.

A paid off collections account will stay on your report for seven years, initiating from the date it was first addressed. While the collections are on your report, it will continually decrease your credit score. The graveness of its effect also decreases over time until it is finally removed after seven years.

How Can We Avoid Collections?

It is the best option out there for you to prevent the appearance of a collections account on your report. Here’s how you can do so:

·        Examine your monthly expense and conserve those unnecessary costs. Many free budget tracking softwares are available online.

·        Contemplate debt consolidation if you are unable to stay on track of minimum payments.

·        Try to strike a deal with your lenders before your debt is sent off to collections. Reach out to your lenders and explain your situation to see if they can help you and withhold from sending your debt to the collection agency.

An attempt for the removal of a collections account is vital, and if you are not able to handle a responsibility of this magnitude, you might consider looking to a credit repair firm like the Blackwater Credit Repair for help. We can help you decide how you want to proceed and what steps you want to take. Whatever the case, we will do our best to prevent and remove all collections accounts and the possibility of a charge off on your account.