Many creditors send your account to a debt collection agency if you have left it unpaid for several months. The debt collection agency will have the task of pursuing you for payment by contacting you and sending messages, and sometimes even offering a settlement on the debt.
Dispute if the Debt Collection Agency is Not Yours
If the debt does not belong to you, you are not obligated to pay it, and collectors are not allowed to list it on your credit report. Dispute the error with the credit bureau. Report the collection accounts and request their removal from your credit report. Provide copies of any evidence you have that proves the debt is not yours.
Even if the debt is yours, it does not mean that the collector has the legal right to collect it from you. If a debt collector has contacted you in the past 30 days, you can request verification of the debt. This requires the collector to provide evidence that you owe the debt. If the collector cannot verify the debt – or if they do not respond to your request – the debt should be removed from your credit report.
Dispute After 7 Years
According to the Fair Credit Reporting Act (FCRA), delinquent accounts can remain on your credit report for seven years from the date of the first delinquency. Sometimes cunning collectors try to re-age the debt to make it look like the account has become delinquent later than it actually is. This keeps the debt on your credit report for a longer period.
Note: If the seven-year reporting period has expired (starting from the date of the first delinquency of the original debt), dispute the debt on your credit report. Any evidence you have concerning the date of the first delinquency will strengthen your dispute.
Dispute When Collectors Sell Debts
Collection accounts often change hands. Debts are assigned and sold to other collectors, so there is a strong likelihood that the collection agency listed on your credit report is not the agency currently collecting on the debt. When this happens, you can remove the old collection account by challenging it with the credit bureaus. If the debt collector fails to respond to the dispute, the credit bureau must remove the account because it has not been verified.
Goodwill Deletion Request
A goodwill deletion request can be an uncertain option, especially with collection agencies, but it’s another option to remove collections from your credit report. A goodwill deletion letter works with accounts you have already paid. In the letter, you simply ask the collector to show some compassion, perhaps because you faced difficult circumstances after a major life change, and to remove the collection from your credit report.
When All Other Options Fail
If you cannot remove the collection account from your credit report, consider paying it anyway. A paid collection account is better than an unpaid one and shows future lenders that you have taken care of your financial responsibilities. Once you pay the collection, wait for the credit reporting time frame to conclude, and the account will be removed from your credit report.
To be sure, consumers can request their credit report for free every 12 months from the three major reporting agencies. It’s worth checking your report to ensure negative information has been removed. It’s also important to note that the information may remain on file and can be released under certain circumstances, such as when applying for a job that pays a certain amount or when applying for a line of credit or a life insurance policy worth a significant amount. Additionally, check with your state’s attorney general for more information, as state laws may provide additional protection.
Questions
Frequently Asked Questions (FAQs)
How much do points increase when I pay off collections?
Your credit score may improve or it may not improve when you pay off a collection debt. Some newer scoring models take that into account, but older models do not. You can monitor your scores before and after paying the debt to see if they improve.
How long does it take before a bill is sent to collections?
There is no specific timeframe for when your creditors will send you to collections. Once you miss a payment, you are considered late, but most creditors will make multiple attempts to contact you and work with you to bring your account back to good standing before sending you to collections. The better you communicate with your creditors, the more likely you are to avoid collections on your credit report.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we check facts and keep our content accurate, reliable, and trustworthy.
Consumer Financial Protection Bureau. “Debts are several years old. Can debt collectors collect them?”
Consumer information from the Federal Trade Commission. “Disputing errors in credit reports.”
GovInfo.gov. “15 U.S. Code § 1692g. Validation of debts.”
Federal Trade Commission. “Summary of Your Rights Under the Fair Credit Reporting Act.”
Consumer Financial Protection Bureau. “Fair Debt Collection Practices Act Annual Report 2019 from CFPB,” page 10.
Bank of America. “Get help with bad credit and financial hardships.”
Experian. “Can paying collections raise your credit score?”
Source: https://www.thebalancemoney.com/remove-debt-collections-from-your-credit-report-960376
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