Removing Collections From Credit Report

Collection items are entries on your credit report that result from failing to pay a debt that is then assigned to a debt collector. Collection items harm your credit and make it difficult or impossible to be approved for certain types of loans, including home mortgages. Mortgage companies usually refuse to approve loans until all collection items are paid. Some people repairing their credit seek ways to have collection items removed.

Federal Law

The Fair Credit Reporting Act allows collection items that are accurate to appear on your credit report for seven years. Technically, you owe the debt until it is paid, but by law it cannot be reported on your credit report for more than seven years. Collection items that are inaccurate must be removed if you file a dispute to the credit bureau.

Payment

Paying the collection item results in the status on credit reports being updated to show it as a "paid collection." Paid collections generally don't improve your credit score, but they do show creditors you resolved the debt. People who are within a year or so of collection items being erased from their report sometimes just wait for the information to automatically be removed.

Pay-for-Delete

Another option is a tactic called "pay-for-delete," which allows the debt collector to remove the information from your credit report in exchange for payment. Pay-for-delete is legal, but it does violate the intent of the Fair Credit Reporting Act. As a result, not all creditors and debt collectors will consider such an arrangement. However, many will, and you should ask before paying.

Disputes

Pay-for-delete and disputing inaccurate entries are the only legitimate options for removing collection items before they expire. However, people sometimes try to manipulate the credit reporting system by disputing collection items they know are accurate. By law, credit bureaus must remove negative information such as collection items if they cannot confirm that the information is acurate. The credit bureau has 30 days to respond to an official dispute you submit by mail or telephone or through the credit bureau's website. If the credit bureau cannot confirm the veracity of the item by the deadline, the collection item must be removed. Usually the credit bureau does confirm the information's accuracy, and it remains. Occasionally, this strategy works, and the information is dropped.