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Learn how what you can do to help repair your credit if you have collection accounts on your credit reports.
Collection accounts on your credit reports can haunt you long after you've resolved your collection account. But there are things you can do to get your credit back on track.
There are two common myths about collection accounts on credit reports:
1. My credit scores will improve if I pay off collection accounts. In many cases this is unlikely. With many of the most popular credit scoring models used by lenders today, collection accounts are negative, whether paid or unpaid. Sometimes you may see a little bump from paying off one of these accounts, but don't be surprised if you don't. (Some of the newer credit reporting models do ignore paid collection accounts, but not all lenders use these.)
2. A collection agency must remove a collection account if I pay it off. This is also not true. Collection accounts may be reported for the time period allowed by law (7.5 years in most cases), regardless of whether they are paid or not. See the exception below!
You'll learn in detail how to deal with collection collection accounts on your credit reports in our ebook, Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights. Get the ebook for free: download it here.
It's incredibly frustrating to be stuck with this negative information on your credit reports. Here's a brief summary of your options:
1. Negotiate. Collectors aren’t obligated to remove an account just because you pay it. But if you have a legitimate dispute about the debt, you may want to push hard for this option. This is known as "pay for deletion" and some collectors are willing to do that as long as they get paid.
2. Dispute the debt. If an item is inaccurate or incomplete you have the right to dispute it. If the collection agency does not confirm it, it must be dropped. Warning: If you haven’t paid the debt, disputing it could revive the collector’s interest in the debt. Learn how to dispute credit report mistakes.
3. File a lawsuit. If the debt is too old to be reported, or if you have legitimately disputed it and the collector continues to report it, you may have case for credit damage under the federal Fair Credit Reporting Act. In addition, the collector may have also violated the federal Fair Debt Collection Practices Act as well as state or federal consumer protection laws. A consumer law attorney can help you determine if you have a case against the collection agency.
4. Work with a credit repair organization. There are many valid warnings about credit repair organizations, and there are very good reasons to be cautious. At the same time, some consumers find that they simply don’t have the time or energy to deal with credit report issues. In that case, hiring a professional may be useful. You'll find information about credit repair at an affordable price here.