About to take up an important loan? Or maybe you want to fund that personal project you have been planning for months now? Everything might go smoothly except for when the lender of your chosen financial institution checks that credit report of yours and finds that there is still a record of a collection you were able to pay from before.
To be able to remove that paid collection stain from your credit report, you typically have to dispute it unless your bank or other financial institution you are dealing with has a unique way of doing things.
Most lenders use an update method of calculating your credit score which automatically removes paid credit due to it being paid already. However, some lenders and financial institutions still use older methods of calculating for you credit score which will include paid collections from the credit report.
There are about three steps to remove that paid credit collection stain from your credit report and it would be: To check all your credit reports, determine the legitimacy of the accounts, choose your plan of action. Will it be to dispute it, ask for a goodwill deletion, pay for delete, or just pay it anyway?
It is also wise to recall all information about that credit report paid collection before choosing a plan of action as it may lead to a string of more inconvenience and nuisance if you choose to go in blind and dispute it right away without first checking your previous financial engagements and responsibilities.
Steps to remove paid collections from credit report
Well, now that you are about to apply for that new loan or any other financial arrangement that will require lenders or credit bureaus to calculate for your credit score, you saw that paid collection still in your credit report as you pull it.
Here are a few things you can do that will help you remove that dreadful stain from your otherwise pretty credit report and keep the collection agency away from your credit information
1. Check all your credit reports
Make sure that all your credit reports reflect only the credits that you know of and are as up to date as possible. Remember, this will be the basis of your credit score computation for credit bureau.
2. Determine the accounts legitimacy
Did you actually owe the debt? The legitimacy of the debt will determine how easy it will be to remove it. If it is your legitimately paid debt then you are going to have a hard time removing it, however, if it is not yours or the collection record is overdue, then you should breeze through disputing its removal from your credit report by your collection agencies.
3. Choose your plan of action
After sifting through the credit bureau records and other available information based on your credit reports, you should choose your plan of action according to your revealed status of credit collection. Remember, choose the plan that truthfully suits your situation. Never dispute something you know you loaned and denying it as your own, as it may prove to be a bigger hassle when people lie about financial agreements.
- Dispute if it’s not your collection
This one is pretty straightforward. Dispute it with the collection agency and present evidence as to why it is not yours and a charge off bad debt wrongfully recorded in your information. At this point, your dispute may probably lead to a debt collection removed.
- Dispute after seven years
Accounts in collection generally remain in your credit reports by credit bureaus for seven years from the time of payment delinquency. If it is a paid collection, then you might wait a couple of years for the collection to be removed from your information. Good thing more and more creditors and credit bureaus use modern methods in calculating your credit score.
- Dispute when collectors sell
Once creditors sell your outstanding debt to a collection agency, you can still dispute your outstanding debt to that collection agency. The same legal rights for both parties apply when it comes to collecting the debt, the only difference now is that your original creditor is irrelevant to the events following the sale of debt.
- Ask for a goodwill deletion
You can always ask for a goodwill deletion. Explain your current financial standing, why you want the collection account removed from your records, and of course what is the reason behind the deletion.
- Pay for delete
Pay your outstanding debt so the debt collections account may be removed from your credit report but the negative information regarding your tardy payments will still be seen by credit bureaus. It may seem to be unethical however, since deletion of your collection account will be against the seven year credit rule and is a form of manipulation of information.
If you’re not able to get the collection account removed from your credit report, pay it anyway.
Pay it anyway as it will eventually be automatically removed. It may be some time before removal but paying it now is not a day later than paying for it tomorrow.
Ways to improve your credit when you have collections
Instead of going through all this hassle to have credit collections removed from your credit records, especially when it was your own doing that made that smear in your credit information, you can avoid all this and improve your records for the credit bureau and yourself.
- Consider paying any unpaid collection accounts
If you are planning to pay any outstanding debt, it would be troublesome if you find out that your original creditor declared your debt as a charge off. ‘What does charge off mean?’ you ask?
What does a charge off mean? It means the creditors assumed that they would not be able to collect the debt you have committed with them like credit card collections and other credit. A charge off account should, however, automatically be deleted seven years after the date of delinquency. The debt collector almost always follows the seven year credit rule, so a misunderstanding may have occurred in your information if it is past seven years and your credit information still shows that paid collection account.
But always consider any outstanding debt especially from collection agencies as they tend to be the ones striking collection account records on your credit report.
- Pay your bills on time
Be mindful of missing even just a day from your payment. Bills are a form of commitment and should be attended to responsibly. You must not let the leisure get the better of you and make sure to pay your bills on time either by adding income or removing unused and unnecessary bills.
- Consider getting credit for timely utility and cellphone payments
Getting credit to pay your bills will secure your on time payments for your monthly bills. It may seem to be another debt ballooning but you will soon understand the genius of it once you start to get paid bills on time even when you cannot do so. However, do not forget to not be tardy when paying your debt for this line of credit.
- Keep credit card balances relatively low
One tip to keep your credit cards in the low is to ask your creditor for a higher credit limit. This will keep your credit card spending on the low as it will not max out every time you get the chance since its limits have been raised.
Remember to never max out your credit card. It is called a credit card limit for a reason, and maxing out your credit card may significantly hurt your credit score in the future.
Be loyal to your credit cards too, as they constitute about 15% of your FICO score. The longer history you have using a credit, the higher your credit score will be pulled.
- Apply for and open new credit accounts only as needed
Never apply for new credit accounts for your wants. Only apply for credit accounts as needed.
Credit applications will require creditors to pull your credit records from credit bureaus to provide information to lenders and it will temporarily pull down your credit score. Doing so often will probably make that temporary pull turn into a permanent drop in your credit score, too.
So always be mindful of your credit account applications as accounts of collection from your credit report may pile up.
- Avoid closing unused credit cards
The FICO score calculator also takes into account your credit card history. Collection agencies track your history to determine the likeliness of a collection agency to collect payment of debt from you.
The longevity of your card account, used or unused is collected by the FICO scoring system and is about 15% of your FICO score.
Not only does not closing your unused account pull up your score, it becomes something like an emergency line of funds. You may not need it now, but who knows when you will be needing to use that unused card.
If you are worried about your unused card’s annual fee, or just plainly trying to cut down debt, then you can always try to renegotiate with your bank or any financial institution you are currently using to waive your annual fee or just downgrade your unused card entirely to avoid any unwanted collection.
You can always choose to close it if you really have to, but a sudden dip in your FICO score might occur. Don’t worry, as long as you pay your collection and avoid paying your bills late then you will pull up your scores in no time.
So were you able to have your paid collection removed from your report? The trick in banking almost always is to connect with people and avoid being late with your bills.
Delinquencies and other forms of not paying your financial responsibilities will all end up in your report that any collection agency has access to, so instead of adding another headache in the future, keep your bill payments on time.
Also, remember that when it is already a paid collection, you can always dispute it with your collection agency. Never stop asking questions and renegotiating your current debt and any other financial matters. Always be assertive when it comes to your hard earned money. Anything paid, after all is paid.