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Have you ever wondered, “If I pay a collection will it be removed?” Did you know that if you pay off a debt collection that has rolled over to the debt collectors, the incident will remain on your credit report? People who work hard to ensure their payment history is squared away often have plans that require their personal finances to be orderly. According to the major three credit bureaus and other credit reporting agencies, paying off a collection amount doesn’t mean that the negative information will come off of our credit report. Furthermore, paying off the debt may not even change how many points or where your credit report stands for up to seven years. In layman’s terms, whether you pay a collection off or not, your credit report will not remove the debt for seven years.
If you’re struggling with collections and unsure of where to turn, contact O’Bryan Law Offices for professional guidance. Working with a skilled consumer bankruptcy attorney can help you better understand how to organize your finances. To schedule your free consultation with us, please call 502-400-4020 today.
How Do Collections Affect My Credit?
Collections can affect your credit in many ways. For instance, if you have ever heard the term “red flag,” this is often precisely what goes through a loan officer’s mind when a personal credit report shows a negative credit history. Paid collections on one’s credit report could still decrease the chances of approval. However, many lenders view paying off the collection entries as a step in the right direction for the applicant.
How to Improve Your Credit When You Have Collections
Credit scores can often weigh heavily on an individual, especially when time-sensitive issues are at hand. For example, say your car breaks down, and you need to purchase a vehicle to make it to work. Situations like this may be challenging for a person with a low credit score. Luckily, major credit bureaus offer support to improve your credit when you have collections.
For starters, unpaid collection accounts can continue to decrease your credit scores, whereas paid collections accounts do not. However, the credit scoring model the lender uses could make a difference in your situation. Often, it is hard to know ahead of time if a lender uses older versions that still count even if the collector shows a paid collection account or not.
Other ways to improve your credit include looking into receiving credit for payments you already made. Regular payments of utility bills, phone bills, and similar expenses show good faith in your payment history.
Lastly, on-time payments will benefit you significantly. If this means reaching out to companies and setting up payment plans to prevent late payments or even delinquent payments, it is worth it if it prevents a collections account.
If you have legal collection accounts on your credit report, there isn’t much you can do to remove those before the expiration dates. However, as trusted Kentucky bankruptcy lawyers, we recommend taking steps to immediately start rebuilding your credit.
How to Get a Paid Debt Off Of Your Credit Report
A negative item can generally stay on your credit report for up to seven years. When this happens, collection accounts are likely to lower your credit score. Things like missed payments or failure to make a payment can cost you in the long run. Sometimes, a collection entry can even keep you from moving forward on a deal like a mortgage or auto loan. This is why it is imperative to try to remove collections from your credit report.
Having collections removed from your credit report is tough. However, it is possible through writing a goodwill letter, disputing the collection, checking for inaccuracies on the collection entry, and lastly asking the collection agency for validation.
Write a Goodwill Letter
If you have paid collection accounts and still have the remaining evidence on your credit report, try writing a goodwill letter. A goodwill letter represents good faith for one’s regular, on-time payments. The letter can be written to request that the collection agency remove paid collections and explain your circumstances. Explain how your credit score increase is desperately needed, why your credit score took a hit, and the measures you have taken to improve your credit score.
Dispute the Collection
Should your attempt at writing a goodwill letter fail, it is time to take things to the next level to ensure your best efforts to have the paid collection removed from your credit report. The next step on your journey is to dig deep into the credit reports and search for anything false or inaccurate information. Your goal is to prepare a dispute letter requesting that the accurate information be updated on your credit report. The dispute letter requests should include any inaccuracies. Should this mean an error on their end is unfixable, they could potentially remove the paid collections.
The Fair Credit Reporting Act requires any legitimate collection accounts to report accurate information by the debt collection agency. If you have the means to dispute the collections account from your credit for inaccuracy on your credit history, call to speak with an O’Bryan Attorney.
Check for Inaccuracies on the Collection Entry
When investigating the collections account entries for inaccuracies, you will want to look for things like :
- Collection account number
- The credit bureau, collection agencies’ clauses
- All transactions paid, dates, and keep your own records
- Dates of your collection accounts – dated opened, dated closed, the delinquent date
- Status of your accounts, payments, payment history, and even a paid collections account
Ask the Collection Agency for Validation
When the credit report appears correct, and you’re unsure where to go from here, ask the collection agency for validation. According to the Fair Debt Collection Practices Act, if the collection agencies are requesting your money, they are required to validate what they intend to collect from you at your request. If you request validation, it must be accomplished within precisely 30 days from when the collection agencies reach out to you regarding the issue. Without validation, you may request they remove the paid debt off your credit report.
Pay for Delete Agreement
A debt collector agency will receive your debt once the original creditor is unable to obtain money towards the owed balances. Instead of directly making your payment towards the creditor, you will now owe the agency. However, once the agency purchases your debt for the creditor, it is not purchased at the total value. Given the agency paid less than the amount owed, any amount you give makes them a profit. When the situations are similar, this gives the term “pay for delete,” meaning negotiating of debt settlement. In some instances, the exchange the agency approves to remove the collection account from the credit report.
Have a Professional Remove Paid Debt From Your Collection Account
When or if you have reached your end with the hassle of having the paid collection account removed from your credit report, have a professional remove paid debt from your collection account. In fact, an entire financial institution is solemnly dedicated to being a credit repair firm. If you or someone you know may need help in this department, O’Bryan Law Offices can help. The financial products, tools, and services our bankruptcy law firm offers for credit repair can take roughly three to four months.
How Debt Collection Works
The last thing anyone wants is negative information on their credit reports. While debt comes in many forms, like getting behind on your monthly payments or any unpaid collections, it hits deeply when a debt collector contacts you over missed payments.
When applying for a credit card or loan, lenders will know that the old lenders lost money on your accounts. Having collections will negatively impact your ability when you need new credit. Many lenders view unpaid debt worse when months go by with payment failure. This is especially true compared to those who make regular on-time payments towards their delinquent accounts.
Original Creditor vs Collection Agency
Credit reports that show the same debt duplicated can typically mean a few things; however, they are hardly ever positive. When an original creditor fails to receive the money for the service they provided, a business will sell the debt to a collection agency. When this happens, the new agency will sometimes report someone’s debt, yet again, to another major credit bureau. As the collection agencies share your debt, the negative impact on an individual is almost twice as bad.
Fair Credit Reporting Act
The Fair Credit Reporting Act allows debt collectors to revise what’s reported to the credit bureaus. When or if errors happen, this will enable them to be corrected. However, stipulations apply by the FCRA that information must be reported accurately.
What Does The FCRA Mean for Consumers?
What the FCRA means for consumers is sometimes collection agencies can hurt themselves by allowing you to pay for delete. For instance, say a collector presents a letter of law to credit bureaus deciding to bar your debt for reasons pertaining to misinformation of the collection account. In this case, reporting the collections account should be removed due to inaccurate information on a collections account. This could be viewed as giving false information.
Debts that Don’t Require Pay for Delete to Remove Negative Credit
The term “pay for delete” refers to the event of a debt collection account and its removal from one’s credit report. The debt settlement can be demonstrated by negotiation for debt settlement for an amount that’s less than the original amount owed. In short, you’re paying money to remove the collection from your credit report. The amount you will pay to achieve this will often vary to have the removal from your credit report.
Federal Student Loans
Pay for delete cases involving federal student loans can be accomplished in most cases in under one year. By making an entire payment history of nine consecutive payments that are on time for ten months, a student can bring their account to a current standpoint. Be sure to make the lender aware you are trying to restore the loan. Then just like that, your federal student loans are up-to-date.
Medical Collections Paid by Insurance
Medical collections paid by insurance companies must immediately be removed from a consumer’s credit report. Additionally, unpaid medical claims must wait 180 days before reporting the delinquent account to a collection agency. This period can allow you enough time to move financials around before affecting your credit scores.
Paid Collection FAQs
Do I Need to Notify Credit Bureaus of Paid Collections?
When it comes to collections that have been paid in full, notifying credit bureaus of the fulfilled payment is beneficial. For example, some credit bureaus will update your credit report’s status to show paid. Unfortunately, the paid-off collection alone is insufficient to remove this from your credit report.
How Long Does it Take for a Paid Collection to Come Off My Credit Report?
A paid collection can take seven years to come off your credit report. However, there are options for you to remove collection accounts from appearing on your credit report. If you or a loved one need guidance on recovering steps for your credit score, need a free credit report, or even need help for collections from your credit dilemma, call to speak with an O’Bryan lawyer.
Kentucky Collection Account Removal Professionals
The truth is, getting lenders and collection agencies to come together on a joint agreement to remove the paid collection accounts from your credit report is one battle that is worth the fight. In Kentucky, it is well worth the attempted letter of goodwill deletions. However, if you come across a collection account listing on your credit report that seems unfamiliar, consider filing a dispute.
The important takeaway is that the Kentucky collection account removal professionals of O’Bryan Law are here for you. If you question if it’s possible to remove collection accounts that have been fully paid, call to speak to our attorneys. Our lawyers have years of experience helping families who have been significantly impacted by situations that stem from paid collection accounts reflecting on their credit reports years after. If you struggle with your credit history or credit scores that negatively affect you after collection accounts stay on your credit report, there is hope! To schedule your free consultation, please call 502-400-4020 today.