How To Remove Credit Collection Services From Your Credit Report In 2022

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How To Remove Credit Collection Services From Your Credit Report In 2022

According to the CFPB, more than one in four Americans have at least one debt in collections. With the rising rate of delinquent accounts, more people are familiar with credit collection agencies. Meanwhile, removing credit collection services from your credit report can be a real pain. Still, not fixing the issue means you’ll end up with a bad credit score. As such, the reward is worth the effort.

As is known, defaulting on your debt obligation can lead to serious consequences. If your debt is 120 – 180 days past due, it will likely end up in collection. This means your original creditor sells your debt to a debt collector for a fraction of the amount owed. Usually, your original creditor will send you a message before handing it over to a debt collector.

These debt collectors or collection agencies then report your debt to the three major credit bureaus; Equifax, Experian, and TransUnion. Since payment history impacts your credit score most, collection will negatively impact your rating. You may see your credit score drop anything from 50 to 100 points.

Debt collection will adversely affect your chances of getting auto loans or a mortgage. This is because a collection signifies a delinquent account. As such, your chances of getting a loan from a lender drop significantly.

The worst part is that paying off the collection can still hurt your credit score. Furthermore, collections can stay on your report for up to seven years from the default day on the original account. Although it will be reported as a “paid collection,” many lending agencies still consider it. Presently, some new lenders ignore paid collection accounts, but the majority of lenders do not. Thus, even if it is paid off, it still counts against you. Thankfully, as time goes on, the collection will have a lessened effect on your credit score.

However, there are some ways you can attempt to remove a collection from your credit record. Debt collection agencies are notorious for using aggressive tactics to collect debts. Follow through with this guide to know what your options are.

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What Are Credit Collection Services?

Credit Collection Services is a debt collection agency. They buy debt from the original creditors for pennies on the dollar. They then attempt to get you to pay your debt to them. You may find them listed on your credit report as a collections account. Their collections can significantly decrease your credit score. Also, a collection account can stay on your credit report for up to seven years whether you pay or not. They buy and collect debt in various sectors. These include financial products, services, education, banking, insurance, healthcare, etc. If you don’t opt for a credit card you can get various kinds of loans for bad credit. There are several other options for your needs like, payday loans, emergency loans, bad credit loans, no credit check loans & personal loans.

Under certain conditions, credit collection services have a right to sue you or garnish your wages. However, the Fair Debt Collection Practices Act keeps them under strict regulations. This act makes sure debt collectors do not use abusive or threatening means to obtain debt. Because of this, it is important to know your rights when dealing with credit collection services. Knowing what the FDCPA says about debt collector practices is crucial. The FDCPA provides you with several rights so that the debt collectors do not take advantage of you.

● You have a legal right to request validation on a debt they claim you owe

● It is illegal for them to report inaccurate information on your credit report

● They must be honest and plain about their identity and motive

● They may not threaten to sue you if they do not intend to do so

● They may not threaten and harass you nor swear at you

● They may not post a public list of debtors

When dealing with credit collection services, keep these points in mind:

● You are not obliged to speak to them over the phone. Keep your correspondence in writing for documentation purposes.

● You may record the call if you have to speak to them over the phone. It is legal in thirty-five states to record a call without the other party’s permission.

● Get familiar with your state’s Statute of Limitations

Ways to Remove Credit Collections From Your Credit Report

1. Ask the Collection Agency for a Debt Validation Letter

If you receive a notice of debt collection, don’t rush off to pay the debt, especially if you believe it might be an error. Some debt collectors can be unscrupulous; employing unsavory means to get you to pay a debt. You want to confirm that, firstly, the debt is yours. Secondly, the collection agency is licensed to collect the debt. Thirdly, there are no errors in the debt.

The Fair Debt Collection Practices Act requires collectors to send a debt validation notice within five days of first contact. If they do not send it, you are backed by law to request one. This method is most efficient if you are dealing with an aggressive collector. By this request, they must halt all collection activities until they prove you own the debt.

This method can also put off collectors who do not have sufficient information about the debt. However, you must send this request within thirty days of the first contact. If not, the bureau automatically assumes you own the debt, and the collector can resume their activities.

In your letter, you can ask for the age of the debt, the original contract to prove you own the debt, and the agency’s authority to collect the debt. If they cannot validate the debt, you can request they delete it from your record.

The reporting limit and the Statute of Limitations (SOL) are also factors to consider in any collection case.

According to the Fair Credit Reporting Act, the reporting limit on a collection account is set at seven years from the date of the last activity. After six months of repeated missed payments, most collections accounts are tagged as bad debt. Thus, the unpaid or paid collection accounts will drop off your record seven years and six months after the last activity.

The Statute of Limitations could be anything from three to six years, depending on your state. If the SOL has passed on a debt, it becomes a time-barred debt. The collection agency is not legally allowed to sue you for a debt that has exceeded the SOL. However, they may still try to make collections on it. Note that the debt may still appear on your record if it exceeds the SOL but isn’t past the reporting limit.

If the debt is close to its SOL, it might be better for you to ignore it. Do not attract unwanted attention to yourself by requesting a debt validation letter. Also, it is considered a violation if the collection agency refuses to send a letter or reply to your inquiries. In such a case, you can file a complaint with the CFPB.

2. Identify Any Errors in Your Report and Dispute

If validating the debt doesn’t work, you may try to dispute it. Remember that credit collection agencies buy debts in bulk. Mix-ups happen and are common. Just because you received a letter from one of them doesn’t mean it is valid. Or that the letter was meant for you at all. Some search through different databases to find a creditor and send letters to everyone with the same name.

Others may not even have proper documentation and may list the same debt multiple times. Also, debts get moved around a lot, from one debt collector to another. Errors are likely to pop up, and sometimes, the original documents go missing. If you believe there is an error in your report, you have claims to dispute.

Firstly, you have to obtain your credit report. This will give you access to details on all your collection accounts.

Normally, you can only get a free credit report from the three credit bureaus once a year. Of recent, however, due to the pandemic, you can request one free credit report weekly.

Once you have it, scour through it for any inaccuracies and negative credit report information. Check through the “Public Records” section. It contains data that could lower your credit score. They include foreclosures, bankruptcy, or repossession. In addition, check your account number, account status, delinquency date, and payment history. Also, search for wrong addresses, wrong credit limits, and derogatory marks.

If you can identify any errors, you can dispute them. You can proceed to report to any of the major credit reporting agencies. You should have your SSN, utility bill, birth certificates, and current and past addresses to support your case. This helps make it easy for the investigators to validate your claims.

The Fair Credit Reporting Act demands that the major credit bureaus and creditors respond to your claim within thirty to forty-five days. After the investigation, if the errors are validated, these major credit bureaus are liable to correct them. The credit bureau is also given a chance to prove the validity of the account.

If they cannot do that, the collection account should be removed from your credit report. You may follow the online reporting process and fill out a dispute form, which is faster. You could also call the credit bureau, but it is unlikely to get a resolution. However, writing letters for disputes makes for easy documentation.

Some people go as far as writing advanced dispute letters that report accurate information and list every error. This letter allows you to insist that the errors are corrected, or the collection account be removed from your credit report. Usually, this makes it hard for the credit agencies to verify or correct the errors. As such, this may result in them dropping the collection.

3. Request a Goodwill Deletion From the Agency

Certain people have found themselves in cases where they missed some payments but have gotten back on track. Unfortunately, those payments may have already gone into collections. This is where goodwill letters come in. This letter is ideal in situations where you may have defaulted, but you now have a straight record. It is written to the credit bureau, the collection agency, or both. Its purpose is to persuade them to remove the collection report from your credit history. It is also called a goodwill forgiveness removal letter.

However, it is important to note that the law is not exactly on your side concerning a goodwill arrangement. This is because neither the bureaus nor the collection agencies are mandated by law to respond to your letter. Sometimes, they may respond within three to four weeks. If the letter works, it may increase your chances of better loan or mortgage terms.

The goal of goodwill letters is to request a goodwill deletion. You can write one if you have made a full payment, regular on-time payments, or have reached a settlement.

In your letter, try to be as honest and specific as possible on the reason for your delinquency. State if you plan to apply for a loan and how the negative information affects your chances. Be honest about your mistake, and reiterate how your payment history has improved. You may choose to show a record of recent on-time payments. Take responsibility for the missed or late payments and explain why they should delete them from your record.

A solid goodwill letter will ask the credit reporting agencies to empathize with you. Try to be as unique as possible and let your letter be specific to your situation. If you previously lost your job or had a medical condition that led to defaulting, state it. However, try to make the letter as clear and concise as possible. Proceed to send the letter to the contact address on your credit report or their website.

Goodwill letters work best when negative information and derogatory marks are marring your credit score. Do not send a goodwill letter if you find inaccurate information; rather, dispute it.

Note that a goodwill deletion will be unlikely if you have a long history of defaulting payments. However, it is more likely to happen if you have a few stains on your record. Also, if removed, the late payments leading up to the collection account would reflect on your record. However, the deletion may help your credit score increase.

Again, a goodwill deletion has no guarantee. You may plead again if you do not get a response. Make sure to follow up on the letter by contacting them as often as possible. It may help to be persistent.

4. Negotiate a Pay-For-Delete Agreement

If all else fails, you may try to negotiate a pay-for-delete. The chances of this kind of arrangement working out are low, and the practice is borderline unethical. This method may also be outdated soon with new credit scoring models that ignore paid collections.

This is an arrangement where a debt collector takes off the collection account from your credit report in exchange for debt payment.

This method only applies to debts not yet paid. This is because your outstanding balance will be the basis for negotiations.

You may decide to negotiate a pay-for-delete agreement with your original creditor. However, entering such agreements with the debt collection agency is better. The agencies buy your debt from the original creditors at a fraction of the amount. Hence, they are likely to make a profit if you pay off the debt.

To begin negotiations, firstly, find out who owns your debt (after confirming the debt is indeed yours). Next, write a letter to the agency or creditor. In the letter, you offer to pay a part of your balance due to the agency. In exchange, they remove all negative information from your credit history. Ensure you facilitate the negotiations in writing and not over the phone to prevent them from reneging.

You can negotiate to pay less than what you owe in your letter. Try to negotiate for a lump sum payment. Afterward, wait for their response. They may respond with a counter offer, and negotiations might ensue until a mutual amount is agreed upon.

In other cases, they may not respond at all. Collection agencies know that there is a risk present in pay-for-delete agreements. It is not an above-board practice. The agencies are supposed to report only complete and accurate information to the bureaus. Sometimes, they could choose not to report the removal of information. However, they could face legal consequences for violating their agreement with the bureaus. Also, because the practice is not exactly legal, you may find it difficult to enforce the agreement if they do renege.

It is important to know that they may remove the collections account if it works. Still, the negative credit report information won’t. As such, the trail of late or missed payments to your original creditor will still reflect on your credit record.

5. Hire A Credit Repair Company

When all else fails, leave it to the professionals. Credit repair is an industry of its own, teeming with people familiar with the nitty-gritty of all things credit.

Hiring a credit repair company works best for those who might be too busy to handle their personal finance issues. Exchanging correspondence with debt collection agencies can be tiring and frustrating. It is time-consuming, and one wrong move can be costly. You may not be so sure of what your rights are, and many will try to take advantage of your ignorance.

However, credit repair agencies are conversant with these rules. They specialize in removing negative information from your credit report. Such reports as collections, repossessions, tax liens, and bankruptcy can tank your credit score. They may also offer valuable financial insight on how to improve your credit score. Their job is fixing your credit.

Besides disputing errors in your credit reports on your behalf, such as outdated or inaccurate information, they can also spot scams such as re-aging and listing a collection multiple times. They will also effectively track and follow up on every action of the bureau or creditor. It is also their job to ensure that none of the negative credit report information taken out is re-entered.

Credit repair agencies can be a bit costly. One should budget about 100 dollars a month for their services. You can expect them to repair your credit within 3-4 months. Most of them offer free consultation services on their website. That is a good place to start.

Credit repair services are convenient and take the hassle off your hands. Additionally, you would never need to deal with the debt collectors one-on-one.

When choosing a credit repair company, go for a reputable one. Check them out on CFPB, the Better Business Bureau, and take note of the reviews. The industry is large, and scams are also thriving there.

6. Wait for the Collection to Drop Off Your Credit Report

Sometimes, your only option is to wait. Generally, a collection on your account will fall off after seven years. The number of years starts counting from the date the accounts are delinquent. This is not to be confused with the date your lender passed it off to collections.

If you have a legit debt and have tried every means to get the collection agency to remove it without success, waiting is an option. Collection accounts will undoubtedly impact your credit score. However, its effects will lessen as the years go by.

If the collection does not fall off your credit report after seven years, you can dispute. You may write a letter to the bureaus asking them to remove collection accounts from your credit report.

FAQs About How To Remove Credit Collection

1. How much will a credit collection affect my credit score?

There is no definite way of telling this. However, one thing is certain- a paid or unpaid collection will significantly affect your credit. Some people have had their scores drop as much as 50 to 100.

One factor to consider is the history of your record. Those with multiple delinquent accounts may not feel the impact of one more. However, for someone who has had a good credit history, one collection could leave a huge stain on your record.

Another factor to consider is the type of debt in question. Certain debts do not affect the new models of credit scores as much. An unpaid medical bill, for example, would have a lessened impact on your credit score. But note that this is only with newer credit scoring models like FICO 9.

This is not to say that medical collections will not affect your score.

2. Will a collection be removed from my credit report immediately after I pay?

Unfortunately no. A paid collection will not disappear from your credit report as soon as you make a payment. However, it will change to “Paid Collection Account.” Future lenders will still be able to see it when they access your credit reports. It may not disqualify you from getting a loan, but you may incur higher interest rates. This is a good situation to write a goodwill deletion letter. If you can prove that you are no longer defaulting, the bureau might delete the collection from your account.

3. Can a negative account reappear in my credit report?

A negative account may be reinserted into your credit report. If this happens, the credit bureau will send you a notice. This usually happens when the bureaus believe that the account is accurate, even if you claim it is false. If you choose to dispute, ensure you have supporting documents to prove beyond doubt.

However, if an account comes off your credit reports because of age and reappears, it may be a scam. Do not respond to any collector trying to get you to pay an aged debt.

4. How long will a collection stay on my report?

Paid and unpaid collections will remain on your report for seven years. Afterward, it will drop off your report. However, the impact of unpaid and paid collections on credit scores tends to lessen with time.

Conclusion: Can You Remove Credit Collection?

A collection account on your credit report is typically a hard nut to crack. Paying it may further reduce your credit score. Even after paying it, it still shows up on your report. If you ever encounter a collections account on your report, make sure the debt is yours.

The first thing you should do is check for inaccuracies. According to recent studies, about 76% of such collections accounts contain errors. By law, the collection agency or bureau has to validate its claims. As such, make sure to request a debt validation letter. You can also get pre approved credit cards & approved credit cards for teens to build their credit score.

If afterward, you find an error, dispute it immediately. If you pay it off, write a goodwill letter to get the agency to remove it from your report. Only negotiate a pay-for-delete if it is absolutely necessary. It is not an ideal method, and the chances of it working are slim. If all else fails, turn to the professionals – the credit repair companies.

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