Will the Debt Be Removed From My Credit Report If I Pay the Collection Agency?

You got behind on your bills and missed some payments --- and your accounts went into collection. Now the financial tides have changed and you're ready to pay off that debt and improve your credit score. It sounds straightforward enough, but paying off your debts isn't always a surefire way of getting negative marks removed from your credit report.

Collection Reports

When a notice that an account is in collection appears on your credit report, it generally stays on your credit report for seven years, unless it's actively removed. Your credit report contains additional information about the account, such as when you defaulted; its impact on your credit score decreases as the account gets older. Just how much it impacts your credit score at any given time is difficult to predict and determined by a number of different factors, ranging from the size of the debt to whether or not the report is an anomaly in an otherwise healthy report or part of a pattern.

Debt Payments

When you pay off a debt, your creditor typically makes a report to the credit bureaus that the debt is paid and whether it was paid in full, or if you reached a settlement with the creditor to close the account by paying a lesser amount. After this happens, the account is listed on your credit report as a paid collections account, but the actual collection notice stays on your credit report and continues to negatively impact your credit score.

Removal

To get the entire debt and collection wiped from the credit report completely, you must convince your creditor to agree to ask the credit bureaus to remove it. You can negotiate this agreement when you're making arrangements to pay the debt. Tell them you'll pay the debt if they agree to remove it from your credit history. Be sure to check your credit report after the amount of time agreed on with the creditor to be sure they did actually follow up and remove the collection.

Keep It in Writing

When you make an agreement with a creditor to remove a debt from your credit report, get it in writing. Keep the letter from the creditor agreeing to the removal in case it doesn't keep up its end of the bargain and you have to dispute entry on your credit report with the credit bureaus. You can find instructions for disputing information on your credit report on the website for each of the credit bureaus (see Resources).