How to Remove Collections From Your Credit Report
How to Write a Bankruptcy Explanation Letter
In my experience, it is possible to remove collections accounts from your credit report.
A collection entry on your credit report will lower your credit score. Often, a collection account will keep you from getting a mortgage or auto loan.
Removing collections accounts from your credit history could restore your borrowing power.
Table of Contents:
- How I Removed Collections From My Credit Report
- What You Need to Know About Debt Collections
- How Does a Collection Affect Your Credit Score?
- How Long Does a Collection Stay on Your Credit Report?
- Are Medical Collections Different?
- How to Monitor Your Credit Score
- Need Help? Have a Professional Remove Collections
How I Removed Collections From My Credit Report
When I was in college, I got a cellphone with Sprint. The phone service didn’t work well, so I switched to Verizon but forgot I owed Sprint a payment.
Long story short, the balance ended up going to Sprint collections and showing up on my credit report.
I paid the collection agency, thinking that would delete the collections account from my credit history.
It didn’t. The credit reporting bureaus just changed the account to a “paid collection.”
So I did some research and figured out how to get the collection account removed:
1. Request a Goodwill Deletion from the Collection Agency
The first step is to mail the collection agency a “goodwill letter” that should explain your situation.
Don’t go into too many details, but let the debt collector know if you’re trying to buy a house but can’t because of the negative information on your credit report.
Let them know if you’ve been making on-time payments regularly for a year. Then kindly ask the debt collector to remove the collection account out of goodwill.
I know this sounds like a pipe dream, but it could work. If you need help writing your goodwill letter, use my sample goodwill letter template.
If this sounds overwhelming, you might want to reach out to a credit expert. The team at lexingtonlaw.com is very professional and they do this all the time. It costs some money but is less expensive than you might think considering you are getting your own lawyer to fight on your behalf.
Talk to Lexington Law
2. Dispute the Collection Using the Advanced Dispute Method
If the goodwill letter falls flat and the debt collection remains on your credit report, it’s time for a more advanced method.
For this method, you will need a current copy of your credit report. TransUnion, Experian, and Equifax provide you with a free credit report once a year.
Through April of 2021, you can get a free credit report every week because of the Covid-19 pandemic.
Visit annualcreditreport.com to get your free credit report.
Once you have your credit reports in hand (or on-screen), find the negative item you’d like removed and check it out closely. Be sure to check your report from each of the three credit bureaus.
Confirm all the details and if you see anything inaccurate, report the inaccurate information to the credit reporting agency or agencies.
The Fair Credit Reporting Act requires credit reporting agencies to show only accurate information in your credit history. If you can find inaccurate information, the credit bureau will have to fix the information. If it can’t fix the errors, the bureau should remove the negative item from your credit file.
This method can work because, rather than simply disputing the entire entry, you are going to write an advanced dispute letter that lists especially what is inaccurate.
Check the following items on the collection entry for inaccuracies:
- Account number
- Date opened / Date closed (check all dates)
- Account status (e.g., Closed)
- Payment status (e.g., Collection)
- Payment history
- Delinquency date
- Credit limit
- High balance
- Anything else that appears to be inaccurate
After you have noted the inaccuracies you found, use my advanced credit dispute letter template to write your letter. (This page also includes addresses where you should mail the letters.)
Using this letter, you will insist that each piece of information is corrected or that the collection be removed.
This makes it more difficult for the credit agencies to verify the collection and hopefully result in them simply removing the collection altogether.
3. Ask the Collection Agency to Validate the Debt
If you can’t find inaccuracies on your credit reports, write to the collection agency and ask it to validate your debt.
Under section 809 of The Fair Debt Collection Practices Act, collection agencies are required to validate debts they are attempting to collect — if you request that they do so.
The rub here is that you have only 30 days to make the request after the collection agency’s first contact with you. If they are unable to validate the debt, you can ask them to remove it from your credit report.
4. Negotiate a Pay-for-Delete Agreement
When your original creditor can’t collect your past-due balance, it’ll sell your debt to a debt collection agency which means you now owe the money to the agency.
But when the agency buys your debt, it doesn’t pay the full amount. It may pay only a fraction of what you owed on your original account.
If the collection agency can get you to pay off the debt, it makes a profit. As a result, you could leverage a payment in your negotiations.
Had I tried this instead of just paying off my old Sprint balance, it may have saved me a lot of trouble.
Here’s what you do: You offer to pay part of your balance due in exchange for getting all negative information related to the debt off your credit report. Offer to pay 30 percent of old debt, for example.
For this to work, you have to get this agreement in writing. An agreement over the phone won’t hold up. You could do your part and pay the agreed-upon amount only to learn the agent you spoke with didn’t make a record of the deal.
Now, if you owe $30,000 on an old credit card charge-off, you’d have a hard time coming up with a lump sum so large. Even 30 percent would still be $9,000.
But this pay-for-delete strategy can help when you can afford to make a payment.
Statute of Limitations on Medical Bills
5. Have a Professional Remove Collections
There’s an entire industry devoted to credit repair. A professional credit repair company like Lexington Law Credit Repair could help restore your credit — usually within three or four months.
They won’t take any action you couldn’t take yourself. Since credit repair is all they do, it’ll work faster and more efficiently.
You would need to budget some money for the monthly payments, which average about $100 depending on the plan you choose. There’s also a one-time set-up fee for most credit repair companies.
But if you want to get your personal finances back on track without spending your free time on the phone or writing letters, you should consider this kind of service provider.
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What You Need to Know About Debt Collections
Debt collections come in many forms. Whether it’s an unpaid medical bill, a cell phone bill, or even an $18 library book you never returned, an unpaid debt can lead to negative information on your credit report.
It looks especially bad when the negative item comes from a collection agency. Collections accounts tell other creditors you let an old debt go three or maybe even six months without paying.
When you apply for new credit, lenders know your old lenders lost money on your accounts.
So a collection account will have a negative impact on your ability to apply for new credit — whether it’s a mortgage, a major credit card, or a personal loan.
Original Creditor Vs. Collection Agency
Sometimes the same debt can appear twice on your credit report, which can multiply its negative impact.
For example, this can happen when the original creditor sells the debt to a collection agency, which then reports the same debt to the credit bureaus.
When you’re struggling to make on-time payments, try to resolve the debt before it goes into collections, if possible. Many lenders have relief programs, flexible payment options, or even programs allowing you to skip a payment.
If you’re already being contacted by a debt collector, it’s too late to fix the problems with your original creditor. But you can still resolve the issue using one or more of the options above.
How Does A Collection Affect Your Credit Score?
Once a debt turns into a collection account and gets logged on your credit report, you will see a significant drop in your credit score.
If you didn’t have any other negative items on your credit report, this drop could be north of 100 points.
How far your credit score falls largely depends on how bad it was to begin with.
In other words, a single collection account won’t be a huge deal to someone who already has multiple delinquent accounts and a consistent string of late payments, even on their up-to-date accounts. This person already had bad credit.
But if you’ve established a long history of making on-time payments, keeping a healthy credit utilization ratio, and maintaining a blend of different types of credit, a collection account will make a huge negative mark.
As the collection account ages, its impact on your credit score will lessen. But this won’t help if you need new credit this month.
Paid Collection Vs. Unpaid Collection
A lot of people think paying a collection will automatically remove it from their credit report, like my old Sprint bill.
It’s important to know the collection won’t be removed from your credit report even if you pay it off. It’ll just be relabeled as a paid collection instead of an unpaid collection.
New lenders will still see the collection account when they pull your credit report. Even if you do get approved for a loan, you’ll likely pay a higher interest rate.
Late Payments May Be Reported Separately
Late payments can be reported separately even though it’s associated with the same debt.
If you negotiate with your creditors to get negative information removed, be sure all the negative data goes away.
See our post: Removing late payments from your credit report.
How Long Does a Collection Stay on Your Credit Report?
Unfortunately, unpaid collections and paid collections remain on your credit report for seven years. Over time, the negative impact of your collection account will diminish.
After a few years, you may be able to get an auto loan, credit card, or mortgage again, but the best interest rates go to the best-qualified borrowers.
You could save thousands by getting the collection account removed and fixing your bad credit as soon as possible.
Are Medical Collections Different?
For years, medical collections were treated the same as all other collections.
But FICO has updated its scoring to treat medical collections differently. Medical collections now carry less weight when your credit score is calculated. The newest FICO scoring model puts even less emphasis on medical debt.
Again, this doesn’t mean a medical collection won’t affect your ability to get a loan. Lenders don’t just look at your credit score to make their loan decisions.
They usually pull your entire credit report and notice your past negative items. This, in turn, will affect your approval as well as the interest rate.
This is especially true when you’re applying for a mortgage.
How to Monitor Your Credit Score
Monitoring your credit score has gotten easier in recent years. You can now see your real credit reports from all three bureaus every week, for free, at annualcreditreport.com.
Normally you’d get a free report once a year, as required by the Fair Credit Reporting Act (FCRA). But through April of 2021, you can get free reports weekly because of the coronavirus pandemic.
If you want an even-more seamless way to monitor your credit, log into your credit card or mortgage loan account online. Many lenders now show your FICO score free of charge.
And, if you’d like alerts when something big happens with your credit, check out Credit Sesame or Credit Karma — apps that will send you text messages about your credit.
These apps won’t show your actual FICO score. They may show your VantageScore or another parallel report. But this is enough to tip you off to big changes.
How To Remove Specific Collection Agencies From Your Credit Report
- 09 Tempoe LLC
- 11 Charter Bright House
- 11 Charter Communications
- A1 Collections
- AAA Collections
- Aargon Agency Inc
- Ability Recovery Services
- Absolute Resolutions Investments, LLC
- Accelerated Financial Solutions, LLC
- Account Control Technology
- Account Resolution Services
- ACS Inc.
- Action Financial Services
- Ad Astra Recovery Services
- Advanced Collection Bureau Inc.
- Advanced Collection Services
- AFNI Collections
- AFS Acceptance
- Alliance One
- Allied Collection Service
- Allied Interstate
- AMCOL Systems
- AR Resources Inc.
- ARS National Services
- Asset Acceptance LLC
- Asset Recovery Solutions
- Assetcare LLC
- AT&T Collections Agency
- Atlantic Credit & Finance
- Autovest LLC
- Avante USA
- AWA Collections
- Bonneville Collections
- CACH LLC
- Capio Partners
- Capital Management Services
- Capital One Collections
- Cavalry Portfolio Services
- Cavalry SPV I LLC
- CBCS Collections
- CBE Group
- CCS Offices
- CMRE Financial Services
- Coast Professional
- Comcast Collections
- Commonwealth Financial Systems
- Convergent Outsourcing
- Covington Credit
- Credence Resource Management
- Credit Collection Services (CCS)
- Credit Control Corporation
- Direct Recovery Services
- Diversified Consultants
- Dynamic Recovery Solutions
- Enhanced Recovery Company (ERC)
- EOS CCA
- FedLoan Collections
- First Financial Asset Management
- FMS Inc.
- GC Services
- General Service Bureau
- Global Credit & Collection Corp
- Global Crossing Local Services
- Harris & Harris Ltd.
- HRRG Collections (Healthcare Revenue Recovery Group)
- Hunter Warfield Inc.
- IC System
- IQ Data International
- Jefferson Capital Systems
- Kohls Late Charge
- LCA Collections
- LJ Ross Collections
- LVNV Funding
- MBA Law Offices/CAPIO
- McCarthy Burgess & Wolff
- Midland Credit Management
- MiraMed Revenue Group
- MRS Associates
- MRS BPO LLC
- National Credit Services
- National Credit Systems Inc.
- Nationwide Recovery Service
- NCO Financial
- Nelnet Collections
- Northland Group
- Palisades Collection LLC
- Paragon Revenue Group
- Penn Credit Corp
- Phoenix Financial Services, LLC
- Pioneer Credit Recovery Inc.
- PMAB, LLC
- Portfolio Recovery Associates
- Professional Finance Company
- Radius Global Solutions
- Rausch Sturm
- Receivable Management Systems
- Regional Acceptance Corporation
- Reliant Capital Solutions
- Resurgent Capital Services
- Southwest Credit Systems
- Sprint Collections
- Stellar Recovery Inc
- Sunrise Credit Services
- TransWorld Systems
- United Revenue Corp
- USCB America
- Verizon Collections
- Wakefield and Associates
- Waypoint Resource Group
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