3 Best Ways to Delete Collection Accounts
Collection accounts are known to take a wrecking ball to credit scores. That is no secret. Even paid collections accounts may continue to damage your credit scores nearly just as severely as unpaid collection accounts, depending upon the brand and generation of credit scoring model which is being used to calculate your credit scores. Read the best 3 ways to delete collection accounts.
Why The Scoring Model Matters
Most older credit scoring models do not care so much about the balance of a collection account that appears on your credit reports, but instead, they are designed to care about the fact that a collection account happened at all. Certain newer credit scoring models (i.e. Vantage Score 3.0, Vantage Score 4.0, FICO 9, etc.) were built to ignore paid collection accounts altogether. This could be great news for consumers in the future because it gives people who have made credit mistakes a better chance to redeem themselves more quickly.
Unfortunately, most lenders are not currently using these newer credit scoring models yet. This means that when you apply for a loan the old rules most likely still apply. Collection accounts can still hurt your credit scores even after they have been paid.
Delete Collection Accounts
If you are worried about collection accounts hurting your credit one of the best ways to deal with the problem is to try to have the account deleted from your credit reports. You should be aware, of course, that it is not always possible to have a collection account removed from your credit reports early. Sometimes a collection account will remain on your credit reports for the maximum amount of time allowed under the law (7 years from the date of default on the original account per the Fair Credit Reporting Act, aka FCRA).
Ways to Delete Collection Accounts
However, sometimes you may be fortunate enough to see a collection account deleted from your credit reports early. Here are 3 different ways that you might be able to secure the deletion of a collection account.
The FCRA gives you the right to dispute any account on your credit report if you are unsure that it is being reported 100% accurately. Under the FCRA when you dispute an account with the credit reporting agencies (CRAs) an investigation must be performed. If the accuracy of the account cannot be verified it must be removed from your credit reports, generally within 30 days or less.
Additionally, although you have the right to dispute accounts completely on your own, you also have the right to hire an experienced professional to work on your behalf. The dispute process can often become tedious and complicated. There is nothing wrong with asking for help.
2. Goodwill Removal
There is nothing in the FCRA that requires a collection agency (or anyone else for that matter) to report information about you to the CRAs. Legally a collection agency can elect to remove an account from your credit reports at any time, for any reason. Therefore you can ask a collection agency for a goodwill removal – the early deletion of an account from your credit reports.
Keep in mind that goodwill removals are not given out easily. Although any account can legally be removed from a credit report. At any time the collection agencies all sign agreements with the CRAs. Stating that they will not remove accounts from credit reports early, even if they are paid. As a result of scoring, a goodwill deletion of an account can be tricky and often impossible.
3. Deletion for Payment
If you still owe a balance on a collection account then you may have a small amount of leverage. With which to negotiate the deletion of the account after payment.
However, remember that the CRAs frown heavily upon the removal of paid collection accounts from credit reports. So it can be an uphill battle trying to convince a collection agency to honor your payment for the removal request. Additionally, if you are fortunate enough to have a collection agency. Agree to delete an account for payment you should be sure to get the offer. In writing in advance of any payment to protect yourself.
1. What are the ways to delete collection accounts?
Under FCRA, account holders have three options to delete their collection accounts.
- Disputes – Deletes the accounts if the accuracy is not proven
- Goodwill Removal – Removes the account on the goodwill.
- Deletion on Payment – Deletes accounts on debt payment.
2. What is a collection account?
When the borrower fails to repay the debts, the lender put their accounts under a collection which may affect the credit score of the user.
3. Can a collection account affect credit score?
Yes, collection accounts will affect the credit worthiness of the borrower as that represents their inability to repay their loans.
4. What is the average credit score?
According to Statista, the average credit score in the US is 711 in 2020.
The unpaid loan history will hurt your credit score and bring down your credit worthiness. Deleting collection accounts from your credit report can benefit you in securing a loan or credit. Even a paid collection account will remain in your credit report. If you find there are unauthentic collections in your credit report, claim for dispute. You have other options of closing the collections by paying debt amounts.