Let's cut to the chase with the real brutal truth. The maximum allotted time an account can remain on your credit report is seven years, from the date of the original delinquency. Even if the debt is accurate, the odds are that you can still remove the debt before that time. The chances may be slim and it can be tricky.
Even so, there are a few steps you can take to try to get it removed faster. They’re just unlikely to work.
Typically your allowed one free credit report every year. Visit Annual Credit Report.com - Home Page. If you find one negative item on one report be sure to check all three. You wanna check all credit reports either way for accuracy on all your reports.
Determine that all account’s are in fact legitimate. Is the collection account legitimate — a past-due debt that you actually owe(d)? If it is, you’re going to have a tough time getting it removed from your credit reports. However, if the account is actually incorrect, or should have been removed from your reports by now, then you may be able to get it removed through the dispute process.
If you find inaccurate , negative information on your credit report be sure to dispute it with not just one but all the consumer credit bureaus that are disputing the account. When mailing in dispute letters be sure to mail out by certified mail. This will be protection on your behalf as when you dispute an account the creditor has 30 days to verify the account or the account must be removed.
If the account is legitimate but has been paid, contact the collection agency to request a goodwill deletion. It’s probably not going to work, but it’s worth a shot. A goodwill adjustment may be more viable if you haven’t made any other credit blunders in the past.
Understand the limitations .A collection account can severely damage your credit, but it’s important to remember that this impact is temporary. Manage your credit wisely otherwise, and you should be able to recover in time.
How Long Does A Collection Account Stay on Your Credit Reports?
The fact is that a collection account will not be removed from your credit report just because the account has been settled or paid.
Even after a collection account has been paid, the credit bureaus are still legally allowed to continue to report the collection for up to seven years from the date of default on the original account, thanks to the Fair Credit Reporting Act.
Will the Collection Agency Remove a Paid Collection From Your Credit Reports?
In case you’re wondering whether you can ask a collection agency to delete a collection account early from your credit reports as part of a settlement agreement, you’ll probably be disappointed again. Collection agencies typically won’t agree to this type of settlement, which is known as “pay for delete.”
Why not, especially if doing so might entice more people to pay off old debts? The reason collection agencies generally won’t agree to delete paid or settled accounts is because the major credit bureaus (Equifax, TransUnion, and Experian) ask them not to.
Collection agencies sign agreements with the credit bureaus to obtain the right to report the collection information they want included on consumer credit reports.
No collection agency wants to lose the right to report information to the credit bureaus. That could put it out of business. As a result, most collection agencies take those agreements they sign very seriously.
You might hear that it’s illegal to delete a paid collection account before the seven years from the date of default passes, but that’s false. Credit reporting is 100% voluntary. The law doesn’t require any business to report information to a credit bureau, ever.
In some new credit scoring models, like FICO Score 9, paid collections aren’t given as much weight when calculating credit scores. This can reduce the damage caused by paid collections, but keep in mind that most lenders are still using older scoring models that weigh collection accounts more heavily.
Q&A Video: Removing Incorrect Collection Accounts From Your Credit Report
A Collection Agency Most creditors and medical offices will wait until the original bill is at least 120 days past due before turning the account over or selling the account to a collection agency. (And some will wait 180 days.)
Once an account has been turned over or sold to a collection agency, it’s typically not very long before a new collection account appears on the consumer’s credit reports. Some collections might appear on just one or two credit reports. Many others will be added to reports with all three credit bureaus.
Debt collection agencies generally buy debt for pennies on the dollar, and are often very aggressive when it comes to collecting. In some cases, collection agencies even break the law, threatening people or lying to get them to pay. Listen to the story of Jimmy, an experienced debt collector, along with stories about illegal debt collection, in this NPR interview.
A Collection Account Is Created Future lenders desire to see a full report of your credit management history before deciding whether or not to offer you a new extension of credit or a new loan. This credit history (and your credit scores) is something used again, if you’re approved, to determine how much to charge you for financing.
The presence of any collection accounts on your credit reports, whether paid or unpaid, is indicative of elevated risk. This is very important information for a lender to know when reviewing your application for credit. The Fair Credit Reporting Act (FCRA) allows for even paid collection accounts to remain on consumer credit reports for seven years from the date of default for this reason.
Under the FCRA, when you submit a dispute the credit bureaus will have to investigate your claim. During the investigation, the collection agency will have the opportunity to prove the validity of the account. If the account cannot be proven to be valid, then it must be deleted from your credit reports.
Unfortunately, collection accounts, with or without a balance, can have a significantly negative impact upon your FICO Scores as long as they’re on your credit reports.
So what do you say? Ready to dispute?
Lets start with you Debt Validation Letter!
DEBT VALIDATION LETTER
Collection Company Name
Collection Company Address
Collection account #: 123xxxx
To whom it may concern,
On a recent review of my credit report, I discovered your company reporting the collection account referenced herein. Pursuant to the Fair Debt Collection Practices Act (FDCPA), I hereby notify you that I am disputing this debt in entirety, and you are required to provide me with validation of the debt by providing me all of the following information:
– Copy of original contractual agreement bearing my signature
– A clause in the original signed contract that authorizes the third party like yourself to collect on this debt.
– Statements from the original creditor and itemization of monies owed
– Copy of bill showing last default date
– Proof that the debt is valid and collectible and within the statute of limitations for this state
– Proof that you are licensed to collect in my state of residence
– Agreement between your company and the original creditor that authorizes you to collect on this debt
I am also requesting that you ‘cease and desist’ from all collection activity pertaining to this account. You are only to contact me via mail at the address I have provided herein. I am allowing you a period of 30 days to produce this information. If you’re unable to validate the account, then you are to remove the collection account from my credit reports.
Your failure to act will result in this matter being referred to the Consumer Financial Protection Bureau and the Attorney General’s Office.
Now keep in mind the response in return must be within 30 days. So as I mention mail this out as certified mail. The agency will respond in one of a few different ways. You will either be notified the debt is valid, the item is deleted or they will need more information from you.
Be sure to respond with their request or you could end up at a dead end and getting no results, well at least not the one your hoping for.
Understanding credit utilization
One major factor in maintaining a good credit score is by keeping your credit utilization below 30% . Credit utilization has a big influence on your credit scores. It's important to know about credit utilization and how to manage it for the best rating and the benefits it comes with.
Generally, a single late payment will lead to a greater score drop if you had excellent credit and a clean credit history. If you already have poor credit and your credit report shows other late payments, a new late payment could still hurt your score, but it may lower your score by fewer points.
A missed payment remains on your credit report for up to seven years from the date it occurred. The overall impact of the late payment diminishes over time and goes away completely when the missed payment ages off your report.
10 tips to maintain good credit
Remember being in school and you were always told that your attendance and behavior record are gonna follow you? That's exactly what having good or bad credit feels like.
These 10 steps will help you to get on track whether your building credit or trying to re-establish credit.