Will a Collection Agency Remove My Debt If Paid?

After purchasing your unpaid debt from your original creditor, a collection agency reports the account to the credit bureaus -- resulting in the collection account showing up on your credit report and bringing your credit score down. While paying the debt absolves you of your legal obligation, it does not improve your credit score. In some cases, you can negotiate with debt collectors to have the collection account removed from your credit report.

Paying Collection Debt

When you pay a collection debt, the collection agency must report to the credit bureaus that you paid off the account. It does not, however, have to remove the account from your credit report. Paid collection accounts have the same derogatory effect on your credit score as unpaid collection accounts. Unfortunately, many consumers pay off collection debts with the belief that resolving the debt either improves their credit rating or will result in the collection account vanishing from their credit reports.

Credit Reporting Period

Once a collection agency reports a debt to the credit bureaus, the Fair Credit Reporting Act mandates that the account remain an integral part of your credit history for seven years. The seven-year reporting period for the debt begins the day your payment to the original creditor was 180 days late -- not the day the collection agency purchased the debt. After the reporting period passes, the credit bureaus must remove the collection account from your credit report whether you paid it or not.

Account Deletion

The only way to improve the effect a collection account has on your credit rating is to remove the collection agency's notation in its entirety. One way to accomplish this goal is by negotiating with the company to delete its derogatory report in exchange for payment of the debt. When negotiating with debtors, debt collectors often claim that the company does not have the ability to modify reports it previously made to the credit bureaus. All information providers, however, can modify reported information at any time. Even so, not all collection agencies are willing to modify their reports in exchange for payment.

Precautionary Measures

If you are successful in convincing a collection agency to remove its credit notation once it receives your payment, ask for a copy of the agreement in writing before paying the debt. Because many debt collectors work primarily on commission, unethical individuals have considerable motivation to lie in order to earn additional income. If you do not have the company's approval in writing, you have no way to enforce the agreement yourself should the company deny all knowledge of the previous negotiation after receiving payment.