How to Improve Your Credit Score and Get Rid of Collections

Credit is an important factor lenders use in determining whether to extend you credit. Collection accounts are placed on your credit file if you do not pay debts, such as cable services, cell phone services, credit card companies, loans and video game stores. These accounts will remain on your credit report for seven years and have an adverse effect on obtaining credit you need. It is important to eliminate collection accounts from your credit file so you can improve your credit score.

Instructions

1

Obtain a credit report. To see what collection accounts you have reporting to your credit file, you need to pull your credit report. Each year you can obtain a free credit report from each of the credit bureau agenices from Annual Credit Report .If you have already obtained your free report, you can purchase a credit report from the credit bureau agencies online on their website: Equifax, Experian and TransUnion.

2

Contact collection agencies and arrange for payment. Pay the collection accounts in full if you are able to do so. If not, see if the collection agency will settle the account. Since collection agencies acquire your debt from your original creditors for only pennies on the dollar, these companies will often accept an amount less than what you owe as payment in full for the account. Before settling a collection account, obtain a settlement letter from the collection agency as proof that the agency agreed to settle the account.

3

Obtain another credit report. You will want to ensure that once you paid the collection debt the agency marked it as paid on your credit file. Because collection agencies may not always follow through with their promise to update your credit file, it is important you pay the debt by check, money order or cashier's check so you have proof you paid the amount the collection agency requested.

4

Dispute the debt on your credit file. Under the Fair Credit Reporting Act, a credit bureau agency must verify information you dispute within 30 days or remove it from your credit file. If the collection agency does not update your account as paid or remove it from your credit file, dispute the debt. You can place a dispute online with the credit bureau agencies or by mail. If the debt cannot be validated since you paid it, it must be removed from your credit file. Removing the collection account will improve your credit score and improve the chances of you being able to obtain financing in the future.