There are few financial situations more upsetting than trying to get a collection from your credit report. Collections have a way of lingering for years and affecting your score, which can make buying a home or a car more challenging. However, it is possible to manage this situation if you know what you're doing.
Thankfully, learning how to remove collections from a credit report isn't a challenge if you feel comfortable with the following steps. We carefully did all the research for you to give you a better head start in handling this process smoothly and effectively.
Step One: Check All Your Credit Reports
The first thing to do is sign up for a credit score company, like Credit Karma, and check all your reports. Remember that there are multiple credit reporting options that companies may use, each of which may treat collections differently. Checking your score can see how your collection affects it and what you can do to help it.
Thankfully, there are a few different score options you may use. These typically gauge collections differently, and some may not even include collections at all. That makes it important to go through each option carefully and to identify where your collection originates and what steps you can take to manage it.
Just a few credit score types include:
- FICO: FICO stands for Fair Issac Corporation and is among the most popular and effective credit score types. It has been operating since 1956, with the most current option starting in 2014. It is usually the first score that companies check, so look here to see where your collections may be hiding.
- VantageScore: VantageScore is an alternative to FICO that works with Equifax, TransUnion, and Experian. This method is fairly similar to FICO but uses slightly different algorithms to weigh your credit information differently. VantageScore credit results are typically slightly higher than FICO.
- Custom-Built Credit Scores: While most credit scores fall into the two above categories, some companies may rely on in-house credit scores. These are rare and probably don't include collections information. Most are highly specialized to specific businesses and industries.
Once you've checked your credit scores, find the collection and read through the information. Check your records to make sure it matches your expectations. For example, did you send a check to pay the bill that caused the collections, and it isn't showing up? Track that on your notes, including when the bill was made, how much, and if the money left your account.
Just as importantly, you need to collect contact information from each collection agency. You're going to be talking with them, either on the phone, by email, or by mail. It is essential that they know who you are and that you create an intelligent and open communication line during repayment. Doing so helps to ensure that you can resolve this situation.
Step Two: Make Sure the Debt is Yours
While it doesn't happen to everybody, there are times when a collection may be illegitimate. When learning how to remove collections from a credit report, this is important to establish because if the debt isn't yours, there's a real chance that you can get it wiped from your records.
As a result, it is critical to take this identity theft seriously and to work with your credit agencies and debt collectors to resolve the situation. Most will work with you to establish identity theft and will often wipe your account of all collections.
Make sure that you:
- Contact Your Credit Agency: Talk to the collections agency and credit score firms about the bill's legitimacy. They'll confirm that the debt is suspicious by asking you several questions, including identifying where the bill may have been made and whether you were likely to have done it.
- Work Through the Process: Provide necessary information to the provider that proves identity theft, such as high withdrawals from your bank account and more. This data can help debtors better understand what happened and will further prove your claim.
- Talk With Homeland Security: Homeland Security can provide you with help if your identity was stolen, and you have an unfair collection on your credit report. Contact an agency of this agency to learn more about the steps that you can take, such as officially filing a report.
Note that there's no guarantee that you can get even an illegitimate debt taken off of your records. While most credit companies and collection agencies will work with you and try to establish identity theft, not every company will have the same approach.
As a result, it is crucial to understand other steps that may help you with this process. By taking these critical steps, you can work towards understanding how to remove collections from a credit report without costing yourself unnecessary money and time in the process.
Step Three: Asking for a Goodwill Deletion
If you submitted a claim on an inaccurate collection, the company has 30 days to investigate your claim and decide if they want to remove it. You'll get a letter stating their decision. In many cases, this may be all that you need to do. In most, your claim is likely legitimate and can't be removed this way.
If you know that your collection is for a legitimate debt, there's no point in trying to dispute it. Instead, you can ask for a goodwill deletion instead. A goodwill deletion includes asking the company to write-off your debt out of goodwill. This option may seem desperate, but it can work in many situations. You must:
Write a Letter to the Collection Agency: Sit down and write a letter to the debt agency explaining your life situation. Find the contact information and address for the agency, including where they accept goodwill deletion letters. Often, credit companies expect these letters and set up departments to handle them.
What to do:
- Explain Your Mistake: Discuss your missed payment, why it happened, and highlight how you've worked to improve your payment history. For example, you can discuss how you made every payment for years before missing one and highlight payments after that initial missed cost.
- Use Professional Language: Don't beg or grovel in your goodwill deletion letter. Instead, use simple, straightforward, respectful, and professional language. This will impress the collection agency and make it easier to take you seriously. Get the letter carefully proofread before sending it.
- Send the Letter and Wait: After completing the letter, send it to the proper address and wait. You might get collections letters after sending yours, which are probably just part of a different system in the collections agency. There's no specific time frame for a reply, so be patient.
- Accepting Their Decision: If you're lucky and your collections agency is kind, they may give you a goodwill deletion. Try to avoid falling into the same pattern again because they're not likely to give you multiple deletions. If they don't accept your goodwill deletion request, you still have options.
How often does a goodwill letter work? That all depends on several different factors. For example, some companies have stricter guidelines on debt collection and may never grant goodwill deletions. Others may be more open to it based on their policies and their operating officers.
Furthermore, you're more likely to get a goodwill deletion if you've worked with a company for many years and have had a good history before and after the collection. Many credit companies will want to keep customers as much as possible and will give you a deletion to keep you loyal.
Step Four: Set Up a Pay for Delete Situation
If those other methods don't work and you still want to know how to remove collections from a credit report, we have both good and bad news for you. You can still get rid of a collection from your credit report if those methods fail. The bad news is that you'll have to pay your debt.
Typically, collections stay on your credit report for up to seven years after the time they go due. Even if you literally pay them off the next day, that collection will linger on your report and affect your credit score for years. However, a pay for delete option is a great way to get your score back to normal.
Pay for delete is an agreement you can reach with your collector to either remove your collection from credit reports or not report it at all. In return, you have to pay off the total of the debt, sometimes immediately. Some companies like this option because it gives them money quickly and easily.
Careful, this may be unethical
Note that pay to delete isn't, as Nerd Wallet puts it, “totally aboveboard.” What they mean is that this setup, while not illegal, is unethical. That's because the collector is highly encouraged, but not bound by law, to report debts to credit companies. As a result, they can choose simply not to report your collection.
As a result, it is important to be careful when trying this approach. Some companies may ask you to pay more than you owe to get more money out of you. Others might orally agree to perform this step and then report you anyway. Make sure you get a written contract to prove the validity of your agreement.
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Written by Allen Lee
Read more posts by Allen Lee