How to Remove Collections from your Credit Report￼
Collections on your credit report do not help your credit score. Removing collections from your report is no easy task, but it is doable. First, learn how collections impact your credit and how to remove them. Collections, like most negative accounts, stay on your report for a maximum of seven years.
Paying it will not have it removed; it will only be updated to “paid collection”. A collection is filed differently from a charge-off account from your original creditor. An account will most likely end up in collections if it is 4 to 6+ months overdue. At this point, your creditor no longer contacts you about the loan.
It is never a nice feeling having your debt turned over to a collection agency. When collections are first recorded on your credit report, your score will drop 50 to 100 points, the higher your credit, the more the points. The effect of a collection account reduces with time. The original creditor notifies you before they send the account to collections.
The most common accounts include cable/satellite and local utility services like Direct TV, Comcast, Time Warner, Dish, and Cox. Medical debt and some credit card accounts are also commonly sent to collections. FICO’s new version ignores paid collection accounts. In this new version also, medical collections affect your score less.
VantageScore’s new algorithm does not consider paid collections. These updates mean that paying off your collection accounts will help your credit. However, financial institutions are still in the process of adopting the new scoring models. It may, therefore, take a while for you to see a positive impact. Before you pay off a debt, make sure you owe it first. Send a validation request to the agency.
They must prove their ownership of the debt, otherwise, they cannot act regarding the debt. The Fair Credit Reporting Act (FCRA) sets the reporting limit and it is currently set at seven years after the last activity date. The statute of limitations, on the other hand, is different in various states. It ranges from three to six years or more.
The removal of collections can greatly impact your credit score in a positive way. It is common to find inaccuracies in collection accounts because information is easily omitted or misreported as the debt is passed from one agency to another.
The law allows you to dispute any inaccurate information on your credit report or even any accounts that you are not sure about. You can choose to file the dispute on your own or better, involve a professional. Professionals are good at this and you will have greater chances of success.
Writing A Credit Dispute Letter
Here are a few simple guidelines to remember when sending when drafting your dispute letter: The bureau knows the law. Avoid mentioning laws or threatening lawsuits. Be kind, aggressive language will only hurt you. Include copies of documents that support your claim (not original documents). The letter should be clear and concise.
Sample Credit Dispute Letter
City, St ZIP
Social security number: (your SS number)
Date of birth: (your D.O.B)
Santa Ana, CA 92705
Dear Credit Reporting Agency,
(Ask them to give proof that the item belongs on your report and that they have not violated your rights. If they cannot prove it, ask them to remove the item).
Your confirmation Number
TransUnion Dispute Address
P.O Box 1000
Chester, PA 19022
Experian Dispute Address
Santa Ana, CA 92705
Equifax Dispute Address
P.O Box 740241
Atlanta, GA 30374-0241
What If Your Creditor Does Not Follow Through? If your creditor does not respond, you will have to talk to the credit bureaus. Include a copy of the letter that you sent to your creditor in addition to the other documents. Include any phone conversations or mail response from the creditor as well. If the bureau does not respond, you might need legal help.
Debt Validation Letter sent to Credit Bureaus if collection agency fails to validate the Debt
RE: Account XXXXX-XXXX-XXXXX
To Whom It May Concern,
I am writing to dispute the account referenced above. I have disputed this account information as inaccurate with you, and you have come back to me and stated you were able to verify this debt. How is this possible? Under the laws of the FDCPA, I have contacted the collection agency myself and have been unable to get them to verify that this is indeed my debt.
I enclose copies of my requests to the collection agency, asking them to validate my debts, and the receipts showing that I sent these letter-certified signature requests. This debt is not mine and I was given no evidence of my obligation to pay this debt to this collection agency.
The FCRA requires you to verify the validity of the item within 30 days. If the validity can not be verified, you are obligated by law to remove the item. There is a clear case of unverified debt here, and I urge you to remove this item before I am forced to take legal action.
In the event that you can not verify the item pursuant to the FCRA, and you continue to list the disputed item on my credit report I will find it necessary to sue you for actual damages and declaratory relief under the FCRA. According to this regulation, I may sue you in any qualified state or federal court, including small claims court in my area.
While I prefer not to litigate, I will use the courts as needed to enforce my rights under the FCRA.
I look forward to an uneventful resolution of this matter.