How to remove collections?
How to remove Collections from your credit report
If you have failed to meet a debt obligation, your original creditor will often sell your debt to a debt collector or collection agency. Once your debt ends in collection, this negative information is usually reported to the three major credit bureaus – Experian, Transunion, and Equifax – and damages your credit score.
After a certain period of time, a collection account must be removed from your report. If you want to remove it sooner or you think it is a mistake, you can take several actions to try to remove it from your credit report.
Here, we’ll walk you through the three steps you can take to remove collection accounts from your credit report.
1. Research and check all credit reports
For details on your collection account, review all of your credit reports. You can do this by visiting AnnualCreditReport.com. Typically, you can only get one free copy of each report per year. However, due to the Covid-19 pandemic, you can check your reports from all three credit bureaus for free weekly until April 20, 2022.
Your credit report should indicate whether the charge is paid or not, the balance due (if applicable), and the date the account was delinquent. If you don’t know who the original creditor is and it’s not on your report, ask the collection agency for that information.
Then compare the collection details on the credit report with your own reported account records. If you have not saved any records, please log in to the account listed to view your payment history with the original creditor.
2. Determine the legitimacy of the account
As you review the collection on your account, make sure the debt belongs to you. If it doesn’t belong to you or if you made payments on time to cancel it, dispute the error to remove the collection from your report.
3. Choose an action plan
Here are three actions you can take to try to eliminate the collection accounts that are listed on your report.
1. Dispute of inaccurate or incomplete collection accounts
If you have inaccurate or incomplete collection accounts on your credit report, the Fair Credit Reporting Act gives you the power to dispute this information directly with the credit bureaus or the creditor. You can submit a dispute using the dispute form on each credit bureau’s website. The Federal Trade Commission has sample dispute letters on its website if you need help preparing one.
After submitting your dispute, a credit reporting company has 30 days to investigate your claim. If the credit bureau believes that the information provided is correct, the collection account will be removed from your report. However, if you find that the company reporting the information was correct, the collection account will remain on your report for up to seven years.
2. Request a goodwill removal
If you have a paid collection on your report, you can simply ask the debt collector or the original collector to withdraw the collection. Typically this involves sending the debt collector or collection agency a goodwill removal letter explaining your mistake, asking for their forgiveness, and showing them how your payment history has improved.
With this option, there is no guarantee that your collection will be removed from your credit report, but it is worth a try. Removing the account can help you qualify for better terms on personal loans, mortgages, and credit cards.
3. Wait until it falls
When the debt in question is legitimate and you can’t convince the debt collector to remove it from your report, your only option is to wait. After seven years from the date the account first became delinquent, the collection should disappear from your credit report.
Although this means that the collection will continue to affect your credit score; its impact will diminish over time.
How long do collection accounts stay on your report?
Paid or unpaid collection accounts can legally remain on your credit reports for up to seven years after the original account is first delinquent. Once the collection account reaches the seven-year mark, credit reporting companies should automatically remove it from your credit reports.
If your collection account does not disappear from your credit report after seven years, you can file a dispute with each credit bureau that includes it on their report.
How do collection reports affect your credit score?
While a collection report generally causes serious damage to your credit score, how much it impacts you depends on the credit scoring model you use to calculate your score. It also depends on whether the collection account is paid or not. For example, FICO Score 9, the latest version of the FICO credit scoring model, does not report collection accounts paid.
However, earlier versions of this credit scoring model include paid collection accounts. If a lender uses an older model to assess the likelihood that you will be able to repay a loan, you will likely get a lower credit rating if you have a paid collection account on your credit reports.
Will my credit score increase if a collection account is deleted?
Since payment history accounts for 35% of your FICO score, your score could increase if a collection account is deleted. However, how much it increases will depend on other items listed on your credit report. For example, if this negative account is the only one on your credit report, removing it could raise your score more than if you had multiple other collection accounts on your report.