Can Collections Be Removed From Your Credit Report?

If you have a collection account on your credit report, it can hurt your score. These records show that you missed payments and that creditors gave up trying to get money from you. It then got turned over to a collection agency. But the debt can stay on your report for years after you pay it off. This can keep your credit scores low. So, is it possible to get collections taken off of your credit report? Let’s talk about how collections affect your scores and how you might be able to get them taken off.

How Do Collections Impact Your Credit Scores?

Any late payments or collections can hurt your credit scores. Payment history makes up 35% of your FICO® scores. One of the biggest factors is how recent and how severe the late payments are. A single 30-day late payment may not impact your scores too much. But if you have late payments less than 2 years old it can significantly drop your scores.

Credit scoring models consider collections to be a very bad debt. Your scores will go down when an account is sent to collections. Typically it’s more than a 100 point drop per collection.

Even if you pay a collection account it will still hurt your scores until it falls off your report. Paid collections may hurt slightly less than unpaid ones. But they still indicate you missed payments in the past.

However, collections for medical debt under $500 won’t show on your credit reports. And medical collections over $500 will hurt your scores less with newer FICO® models.

How Long Do Paid Collections Stay on Your Credit Report?

Collection accounts fall off your credit report 7 years from the date of first delinquency with the original creditor. This is according to the Fair Credit Reporting Act.

Let’s say you missed a credit card payment on March 1, 2022. The credit card company charged off your account and sold it to a collection agency on July 1, 2022. Even though the collection tradeline will show July 2022, the clock starts from the first missed payment. So this collection would fall off your credit report March 1, 2029.

It doesn’t matter if you pay the collection or not. The 7 years still applies. The only difference is a “paid collection” status if you satisfy it.

Also, the clock doesn’t start over if the collection is sold to another school. It’s still based on the first delinquency date.

How to Remove Collections from Your Credit Report

Collections can stay on your report for 7 years, so you can’t just get them taken off because you want to. But here are some things that might get collections deleted early:

• Dispute inaccurate information – If you see a collection on your report that is incorrect, you can dispute it. Disputing collections with the credit bureaus (Experian, Equifax, TransUnion) is your first step. If it was reported in error or you have proof it’s not valid, the collection agency must remove it.

• Negotiate for deletion – You may be able to negotiate directly with the collection agency for deletion in exchange for payment. This is called “pay for delete.” Get any agreement for removal in writing before paying.

• Ask for goodwill removal – You can ask the collection agency to remove it as a “goodwill adjustment.” Emphasize you’ve paid other debts responsibly. And explain any extenuating circumstances. They are not obligated, but it’s worth asking.

• Wait for automatic removal – After 7 years from the first delinquency, collections must be removed. Continue paying current obligations on time. And avoid any additional late payments that could lead to more collections.

• Improve other credit factors – Don’t just wait 7 years for collections to disappear. Work on improving your credit history by paying bills on time, lowering debt, and limiting new applications. This helps offset the damage of collections.

Tips for Avoiding Collections

The best way to handle collections is to avoid having accounts go to collections in the first place. Here are some tips to prevent collections:

• Make payments on time every month. Set up autopay or payment reminders.
• Contact your creditors immediately if you anticipate a late payment. Explain the situation and see if arrangements can be made.
• Prioritize paying secured debt like auto loans or mortgages first. These types of accounts are more likely to go to collections if you default.
• Communicate with creditors if you’ve had a major financial hardship like job loss or illness that is impacting your ability to pay.
• If an account is in collections, pay it or negotiate for less. Unpaid debt is more damaging to your scores.
• Review your credit reports regularly to make sure no collections appear, especially if you’ve paid the debts. Dispute any errors.

The bottom line is avoiding collections in the first place through responsible money management. But if you already have collections, take action to remove or offset them. Paying collections, negotiating for deletion, and disputing errors can help. Continuing to build positive credit history can also help improve your scores over time.