How To Remove Collections From Credit Reports

past due collection notice

When you default on a credit obligation the original creditor will try to collect it from you directly. After enough time has passed, they’ll grow tired and either consign the debt to a collection agency, or sell it to a debt buyer.  At this point you’ll likely start getting letters and phone calls from collection agencies attempting to collect the debt. They will also probably report the collection account to all three of the credit reporting agencies.

According to the Consumer Financial Protection Bureau (“CFPB”) some 40 percent of the disputes received by the credit reporting agencies in 2011 were specific to collection agency accounts.  And while the context of those disputes is not public, it’s not a stretch to believe many, if not most, of the consumer disputes were filed in an attempt to get the collections removed from their credit report cards. That being said, here are some of the more common methods on how to get collections removed from your credit reports:

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Errors Happen

The Fair Credit Reporting Act (“FCRA”) is very clear on the matter of data accuracy.  If a consumer challenges a collection account and the item cannot be verified, then it must be removed. The credit reporting agencies handle billions of data elements across hundreds of millions of consumers and mistakes can happen. If the collection is an error you should file a formal dispute directly with the credit reporting agency.

A collection can be erroneous for a variety of reasons. The collection can be older than seven years, which means it is outdated and must be removed. The collection may belong to an individual other than you, which means it must be removed. The collection may have been filed in error by the collection agency and never actually occurred, which means it must be removed. And finally, the collection agency may not be able to verify the accuracy of the collection account, which means the credit bureaus must remove it.

Fact vs. Fiction

The credit reporting agencies are allowed to maintain collection accounts for up to seven years from the date the original account went into default. For example, if you defaulted on a medical bill in January 2010 any and all subsequent collections stemming from that default must be removed from your credit reports no later than January 2017.  There are no exceptions to this rule and there is nothing you can do to cause that date to change…nothing.

Having said that, there are rumors about processes that can lead to the removal of collection accounts.  The “pay for delete deal” is one of those rumors.  There are people who suggest you can negotiate for the deletion of a collection account in exchange for payment to the collection agency. And while I’m sure this happens from time to time, any suggestion that this is a common or recognized practice is misleading.

Anyone who suggests there is a silver bullet for collections is being dishonest. The credit reporting agencies will not remove a collection if it’s correct and verifiable. If you were to read through their reporting standards’ guide you’d find several entries reminding collection agencies and other lenders that payment in full is not justification to remove a derogatory and accurate item.

If you’re looking for how to remove medical collections from credit report…

Unfortunately, the same rules apply. If you didn’t pay the bill, there is no exception just because it’s a medical collections.

Time Is Your Friend

Not only do collections have to be removed after seven years but their impact on your credit scores will subside as time passes. Credit scoring systems will actually start to reward you as your collections get older. Of course, that assumes you don’t have a bunch of other derogatory items on your credit reports.

If you have collections that you are unable to remove then you’re going to have to live with them and do your best to counterbalance their negative impact as much as possible. This can be accomplished by not missing payments on any other items and paying down your credit card debt as much as possible.  After a few years you’ll be surprised just how much your credit scores have improved by doing nothing other than letting time pass.

More on Credit Scores from Credit Expert, John Ulzheimer:

Ask the Expert: How to Correct Credit Report Errors

New FICO Score Coming Soon to a Credit Bureau Near You

The High Cost of Having a Bad Credit Score

5 Secrets to Earning Great Credit Scores

Ask the Expert: Can I Dispute My Credit Score?

What’s More Important Than Your Credit Score? The Factors Behind It

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Published August 18, 2014 Updated: April 17, 2016
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