How To Get A Collection Removed From Your Credit Reports

John Ganotis

John Ganotis

Updated Dec 27, 2018

There are 3 collection accounts on my credit reports. I’m working to improve my credit and I was wondering, what is the best way to get the accounts removed from my reports? If I pay the accounts in full, will they be erased?

The question above is a very common concern for consumers who are looking to rebuild damaged credit. Unfortunately, the answer to the question will frustrate and disappoint most consumers as well.

Collection Accounts Will Linger

The fact is that a collection account will not be removed from your credit report just because the account has been settled or paid.

Even after a collection account has been paid, the credit bureaus are still legally allowed to continue to report the collection for 7 years from the date of default on the original account, thanks to the Fair Credit Reporting Act.

To put it another way, a collection account can remain on your credit reports for 7 years from the date the original account became 180 days past due, regardless of whether the account has a $0 balance.

If you have an unauthorized or otherwise unverifiable collection account on your credit reports, you can submit a 609 dispute letter regarding that account. This will force the credit bureaus to attempt to verify the account, and, if they can’t, they’ll have to remove it from your reports. But take note that this won’t erase your debt; it just removes the record from your credit reports.

Q&A Video: Removing Incorrect Collection Accounts From Your Credit Report

How Do Collection Accounts Get Started?

In order to understand why paid collections are left on consumer credit reports, let’s take a quick look at the process whereby collection accounts end up on a consumer’s credit report in the first place.

Stage 1: An Uncollectible Bill

The process begins with an uncollectible bill (i.e. a medical bill, a credit card bill, a loan, etc.). Each original creditor or medical office has a policy regarding what they will do with uncollectable debt, such as selling the account to a debt collector, turning the account over to a collection agency, or even writing the account off and making no further collection attempts.

Stage 2: A Collection Agency

Most creditors and medical offices will wait until the original bill is at least 120 days past due before turning the account over or selling the account to a collection agency. Once the account has been turned over or sold to a collection agency, then it is typically not very long before a new collection account appears on the consumer’s credit reports.

Debt collection agencies buy debt for pennies on the dollar, and are often very aggressive when it comes to collecting. In some cases, collection agencies even break the law, threatening people or lying to get them to pay. Listen to the story of Jimmy, an experienced debt collector, along with stories about illegal debt collection, in this NPR interview.

Stage 3: A Collection Account Is Created

Future lenders desire to see a full report of your credit management history before deciding whether or not to offer you a new extension of credit or a new loan. The presence of any collection accounts on your credit reports, whether paid or unpaid, is indicative of elevated risk and very important information for a lender to know when reviewing your application for credit. The Fair Credit Reporting Act (FCRA) allows for even paid collection accounts to remain on consumer credit reports for 7 years from the date of default for this reason.

Getting Collection Accounts Removed

In reality, there is only one way to get a collection account removed from your credit reports early, prior to the date when the credit bureaus are required to purge the account from your reports by law. If a collection account is incorrect or outdated, you can dispute the account with each of the credit bureaus reporting the inaccurate information.

Under the FCRA, the credit bureaus will have to complete an investigation of your claim, during which the collection agency will have the opportunity to prove the validity of the account. If the account cannot be proven to be valid, then either the collection agency or the credit bureaus must remove it from your credit reports. It is worth noting that if you are disputing an account which the collection agency views to be valid then you can have a very hard time getting it deleted.

Collection accounts, with or without a balance, can have a significantly negative impact upon your FICO credit scores as long as they’re on your credit reports. After time passes the collection accounts begins to lose their negative impact, if there was any to begin with.

This is good news for the consumer as the potential negative score impact from a collection account will not last forever. And, perhaps the best news, the most recent version of the VantageScore credit score does not consider collections that have a zero balance. That means once they’re paid or settled (and then updated at the credit bureaus) they will no longer be considered.

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