How to Delete a Collection Account & Its Effect on Credit

Delinquent credit card accounts eventually get charged off and sold to debt collectors, which add a collection entry to your credit reports. Collection agency entries hurt your credit badly because they are part of your payment history, which is 35 percent of your credit score, according to the Fair Isaac scoring company. You cannot delete accurate collection information yourself, but the debt collector may agree to erase the item in exchange for a discounted payment from you.

Instructions

1

Review your finances and determine how much you can afford to pay to settle your collection account. Collection agencies buy charged-off credit card accounts and other unpaid bills for pennies on the dollar, so they make money even if they settle for a steeply discounted settlement from you. You may be able to pay as little as 40 to 60 percent of the original amount according to Bankrate.

2

Call the collection agency, and make your settlement offer. Tell the debt collector that you want the collection account erased from your Equifax, TransUnion and Experian credit reports as a condition of the settlement. You need complete erasure of the account to stop its effect on your credit, as a paid collection entry is almost as bad as an outstanding one. The collector may try to negotiate a higher amount, so initially offer less money than you are actually able to pay.

3

Ask the debt collector to mail you a signed letter detailing the terms of your settlement, including removal of the account from your credit reports once you send your money. Never remit your payment until you get written confirmation that the collection agency will remove its entry from all your credit bureau records.

4

Send the agreed-on payment to the collection agency along with a copy of the agreement letter. Include a note that says you expect the account to be removed from your credit reports immediately because you fulfilled your end of the bargain.

5

Order your three credit reports through the Annual Credit Report website a month or two after remitting payment to the collection agency (see Resource). That website provides consumers with free reports once per year. Check all three copies to ensure the collection account does not show up on any of them. The negative effect on your credit disappears completely as soon as the collection entry is erased.