How to Get Collections Off Your Credit Report

Individuals fall behind in their payments for a variety of reasons. In the current market, this is becoming a more common occurrence. Identity fraud is also a prevalent problem and can wreck havoc on a person's credit.

Regardless of the cause for collection activity, there are some steps that can be taken to help minimize the negative effects on a credit report.

Do not be fooled by companies promising to "fix your credit report" for a fee. You can do exactly the same thing as they for no fee, and sometimes with better results.

I worked for a major financial institution in their collections department. I am familiar with what can and can not be done.

Instructions

1

OBTAIN A COPY OF YOUR CREDIT REPORT: Obtain a recent copy of your credit report. You will see for certain exactly what your credit report is stating about your credit, and where you need to focus your attention in resolving the damage.

2

DETERMINE IF THE ACCOUNT(S) WENT TO COLLECTIONS DUE TO YOURSELF OR BY IDENTITY FRAUD: If you suspect that someone may have gotten a hold of your personal information and opened up accounts in your name without your knowledge, you need to contact the creditor immediately. They will require that you file a police report and submit it to them for the record. The creditor will do their own internal investigation. Once it is determined that the account is indeed involved in identify fraud, they will report the account to the credit bureaus as involved in identity fraud and will fix any damaging collection activity as well. In this situation, it is best for you to notify the three credit bureaus yourself and request that a permanent memo be placed on record stating that you have been a victim of identity theft.

If an account(s) were not involved with identity theft, then go to step three.

3

DETERMINE HOW BAD IS THE DAMAGE: The required steps necessary to take to resolve the damage depends upon how delinquent the account(s) were/are. An account which has gone one or two payments behind is handled differently then one which has "charged off" or has gone six payments or more past due.

If the account is currently past due by one payment or even a few, it is to your benefit to obviously get current as quickly as possible. If you are unable to pay more then the minimum, contact the financial institution and explain the situation. See if they would be willing to bring the account current if you continue to make the minimum payments. Mortgages will often place the late payments at the "end of the mortgage" and bring the account current. Credit card companies will often do this after three minimum payments have been made. In a situation like this, there is nothing a financial institute can do to change your collection's reporting history (stating that you were/are late on payments). It is the law and they must report the account late if the payments are/were late. Whether you pay someone with the hope of "fixing" how the account is/was reported, it can not be done so don't waste your money.

For those accounts which are considered "charged off" or six or more payments behind, the damage is excessive. The only way of hoping to improve this status on a credit report is by either paying it completely off or by offering the creditor a settlement. Obviously, it is to your benefit to pay it in full since the account will then state on the credit report as "Paid in Full" with a zero balance. If you and the creditor agree so pay a certain percentage of the balance, it will be reported as "Settled in Full" with the remaining balance remaining on the account, though no further collection activity will take place. Either one of these options are certainly better then allowing the balance and the "charged off" status to remain. Remember that the account may be considered "charged off" by the creditor, but collection activity will continue. There is virtually no way you'll ever get any type of loan on your own with such an account status. Being granted a "Paid in Full" or "Settled in Full" status allows for the possibility of future loans.