Summary: This article will explain step-by-step how to remove collection accounts from your credit report.
Aside from a bankruptcy or charge-off, a collection account on your credit report can have one of the most significant negative impacts on your credit score. In fact, a single collection can cause your credit score to drop over 50 points.
However, there are a few steps you can take to deal with collection accounts in the hopes of removing them completely from your credit report.
How Do Collections Work?
Before we jump into the actual steps, there are a few important details about collection accounts you should know in order to aid the removal process.
Internal Collection Departments Vs. Third Party Collection Agencies
First of all, there are two types of collectors. It’s important to know which type is currently handling your account. Many companies have internal collection departments. Typically these departments handle unpaid accounts anywhere from 60-120 days late.
After 120 days, many companies will “sell” the account to a third party debt collection agency. These agencies typically pay less than the balance due on the account. Assuming they collect the entire debt, this is how they make a profit.
Usually a collection account doesn’t get reported on your credit report until the account is over 120 days late. Therefore, if possible work with the original creditor’s internal collection department to handle the unpaid bill before it gets sold to a third party.
It’s usually more pleasant to work with internal collectors rather than collection agencies, who can be quite aggressive. Nonetheless, we’ll get into how to deal with collection agencies in a bit.
How Long Do Collections Stay on Your Credit Report?
Once a collection account is reported on your credit report, you can expect it to remain on your credit report for 7 years. Unfortunately it does remain on your credit report for a long time.
The good news is that as the collection account ages, the less of an impact it has on your credit score. In other words, the older the collection, the less it hurts your credit score. Recent collections have the biggest impact, especially when they are first reported. This is when you’ll likely see that 50+ point drop.
Unpaid Collections Vs. Paid Collections
When you’re reading your credit report, you’ll likely notice that the collection says either “paid” or “unpaid”. This is pretty self-explanatory, paid collection account meaning that you have paid the collection, unpaid meaning you haven’t paid it.
A paid collection has just as much of a negative impact on your credit score as an unpaid collection.
The important thing to note here is that it doesn’t matter if it’s paid or unpaid as far as your credit score goes. You would think otherwise, but a paid collection has just as much of a negative impact on your credit score as an unpaid collection. From the point of the credit score algorithm, the fact that the account went into collections in the first place is the most important factor.
That said, a paid collection will look better to potential creditors if you’re applying for a loan. Many debt collectors will lie and say that your credit score will improve if you pay off the debt. Don’t believe them, as they are just trying to get you to pay quickly.
|Unpaid Collection||Paid Collection|
|– Negative credit score impact||– Negative credit score impact|
|– Easier to negotiate removal||– More difficult to negotiate removal|
|– Looks bad to potential creditors||– Doesn’t look as bad to potential creditors|
How to Deal with Debt Collectors
Dealing with a collection agency can be extremely stressful and unpleasant. The problem is that debt collectors can be quite aggressive.
The most important thing to keep in mind is that they are being aggressive in an attempt to scare you. The more they can scare you, the more likely you are to pay the debt without question.
You can save yourself a significant amount of time and money.
Debt collectors used to be a lot worse. Since then, the Fair Debt Collection Practices Act has changed much of this.
Nonetheless, it’s important to know how to deal with a debt collector. With a little bit of knowledge, you can save yourself a significant amount of time and money.
The best tip I can give you when dealing with debt collectors is to avoid any communication over the phone. It’s simply not worth the stress, especially if they are being aggressive. You can block their number, or simply ignore the calls.
Don’t worry, they will send you letters too!
If you do happen to end up on the phone with a collector, stay calm and inform that you will only communicate via mail.
Whatever you do, don’t pay them over the phone or provide them with your credit card or bank information!
Next, we’ll get into how to negotiate with collectors to remove collection accounts from your credit report.
How to Remove Collections From Credit Report
I recommend trying each one of these steps to remove collection accounts from your credit report. Each individual method will work best depending on your particular situation. That is, not all removal methods will work for everybody.
Nonetheless, all of these methods are highly effective, and if in fact you do get a collection removed from you credit report, you can expect a significant increase in your credit score.
1. Write a Debt Validation Letter
The best method to start with is called a Debt Validation Letter. This is a letter that is intended to force a collector to validate to you that the debt is actually yours and that you owe what they say you owe.
By law, you have the right to request that a creditor validate the debt. The caveat is that you only have 30 days from when they first contact you to send them the letter. So if you’re going to use this method, you need to act quickly.
Your letter should basically request that they validate the debt. You should ask them for proof that the debt is really yours. Also include that if they are unable to validate the debt, they must stop contacting you and remove any collections from your credit report.
Many times the collection agency won’t have enough information to validate the debt, and they’ll simply not respond and remove the collection from your credit report.
2. Offer to Pay For Delete
The debt validation letter might result in the debt actually being validated. In this case, you should move on to the next method, which is offering to pay the debt if the collector agrees to remove the collection entry from your credit report.
You have two ways to do this. First, if the debt is rather old, you can more than likely negotiate to less than the current balance.
However, if it’s a newer debt, the collector will be less likely to accept less than what is currently owed. Nonetheless, it’s always worth a try.
Again, it’s best to do this negotiating via mail rather than on the phone. What you want to do is tell the collector that you will pay the amount if they agree to delete the collection account from your credit report.
Make sure you get this agreement in writing!
Pay for Delete is one of the most successful methods for removing collection accounts from your credit report.
3. Contact the Original Creditor
When the debt has been sold to a third party collection agency by the original creditor, it’s still possible to contact the original creditor and get the collection removed.
For example, if you’re contacted by a third party collection agency such as TransWorld Systems, but the original creditor is Citi, try and contact Citi’s collection department.
They can often remove the collection account as well. However, keep in mind that you need to be prepared to “pay for delete” in this case as well.
4. Dispute the Collection as Inaccurate
Another technique you can employ is to simply dispute the collection as inaccurate with the three credit bureaus, Transunion, Equifax, and Experian. You will be most successful if you’re able to uncover an inaccurately on the collection entry. Here are a few items to check:
- Balance Due
- First Reporting Date
- Past Due Date
- Creditor Name
You really want to look over your credit reports very carefully. Again, the goal here is to find anything that’s incorrect. Once you find an inaccuracy, go ahead and dispute the collection online with the credit bureau.
Note: This technique is most likely to work when there is actually an inaccuracy. If you don’t find anything wrong, you can still try to dispute it, but more than likely the credit bureaus will verify the collection and it will remain on your credit report.
Remember, you only need to dispute with the credit bureaus where the collections account is inaccurate. You don’t need to dispute with the credit bureau if the information is accurate.
5. Hire a Professional
Lastly, if you’re the type of person who would rather have a professional handle it and just be done with the whole thing, I suggest you check out Lexington Law Credit Repair.
They’ll take care of you, and honestly they usually get your collection account removed quicker than if you try to do it yourself. Give them a call at 1-844-331-6062 or Check out our review of their service.
The effort required to remove a collection from your credit report might seem a bit overwhelming. Yes, it can be difficult, but in the long run it’s worth fixing your credit.
I’ve outlined several great ways to remove a collection account from your credit report yourself. Again, you can always hire a credit repair agency if you don’t want to deal with the hassle.
The following is a list of common debt collection agencies.
- AAA Collections
- AMCOL Systems
- AR Resources Inc
- ARS National Services
- AT&T Collections
- Action Financial Services
- Allied Collection Service
- Asset Acceptance LLC
- Avante USA
- CACH LLC
- CBE Group
- CCS Offices
- Capital One Collections
- Cavalry Portfolio Services
- Cavalry SPV I LLC
- ConServe Collections
- Credit Control Corporation
- Direct Recovery Services
- Diversified Consultants
- Dynamic Recovery Solutions
- EOS CCA
- FedLoan Collections
- First Financial Asset Management
- General Service Bureau
- Global Credit & Collection Corp
- HRRG Collections
- IC System
- Jefferson Capital Systems
- LCA Collections
- LJ Ross Associates
- LVNV Funding LLC
- MRS Associates
- MRS BPO LLC
- McCarthy Burgess & Wolff
- MiraMed Revenue Group
- NCO Financial
- National Credit Services
- Nationwide Recovery Service
- NelNet Collections
- Northland Group
- Palisades Collection LLC
- Penn Credit Corp
- Pioneer Credit Recovery Inc.
- Portfolio Recovery
- Radius Global Solutions
- Rausch Sturm
- Reliant Capital Solutions
- Resurgent Capital Services
- Sprint Collections
- Sunrise Credit Services
- TransWorld Systems
- USCB America
- United Revenue Corp
- Verizon Collections
- Wakefield and Associates
- Waypoint Resource Group