Collection accounts on your credit report are highly damaging. In fact, the only items more damaging to your credit score are major incidents such as foreclosures and bankruptcy. Fortunately, collection accounts on your credit report are much easier to remove than those major delinquencies.
If the collection account giving you trouble falls into one of the following three categories, you should be able to get the entry removed from your credit report without too much trouble. Just follow these tips to clean up your credit and improve your credit scores by getting those collections off of your credit report.
Collection Accounts on Credit Report: Statute of Limitations
The easiest collection accounts to remove from your credit report are those that shouldn’t be there due to the statute of limitations on reporting. This one is usually pretty easy to spot: the collection agency will generally send you a notice about a debt that is many years old. When you don’t pay, they increase their collection activities, including putting a notation on your credit report.
Later, when you look at your credit report, you’ll see the debt listed in collections with a much more recent delinquency date. Occasionally, the date will be accurate but the collection will still be added, even though the statute of limitations for reporting the debt has passed.
What You Need to Know:
Re-aging the debt to make it appear as though it is more recent is against the law and the Fair Debt Collection Practices Act, but debt collectors hope that you won’t realize that your rights are being violated. If the debt is more than seven years old, it can’t be reported on your credit report, period.
The only exceptions to this are items such as judgments and bankruptcies, which can stay on your report for up to 10 years. This does not include credit card accounts, or loans, even if they were a part of a bankruptcy settlement.
What You Can Do:
In this instance, filing a dispute with the credit bureaus should be enough. You may need to have documentation that proves that the debt is older than is being reported, but in many cases you may not.
Collection agencies know that they are taking a risk in reporting debt that is legally too old to appear on your credit report, so most debt collectors will remove the item from your credit report as soon as you file the complaint.
Collection Agency Complaints on the Rise
Collection Accounts on Credit Report: Inaccurate Information
Another common issue with collection accounts on your credit report may be the accuracy of the entry. When charged off accounts are bought and sold, it’s not uncommon for pertinent account details to get lost in the shuffle. It’s also not uncommon for collection agencies and debt collectors to attempt to attach an extra “fee” or surcharges to the original debt.
When you check your credit report, you may notice higher balances than the original debt. You may also notice a difference in the balances from one collection agency to another as the debt is shuffled around.
What You Should Know:
Legally, the collection agency cannot add additional charges to your original debt, unless the agreement you signed with the original creditor explicitly states that such charges may be added when an account goes into collections.
What You Can Do:
This is another instance where you should be able to dispute the debt and have it removed from your credit report. However, be prepared to have documentation to back up the original debt amount. For credit card charge-offs in particular, sometimes the interest charges and penalty fees continue to accrue for months after your initial delinquency.
Another option is to request verification of the debt. In some instances, the various changes in the amount you owe may be due to poor bookkeeping. In that instance, if the collection agency is unable to verify the debt, they will have to stop all collection activity regardless of whether or not you actually owe the debt.
If you have documents showing the final amount of the bill before it went into collections, you’ll want to include a copy in your dispute. Make sure that the collection agency isn’t adding their own “processing fee” or “convenience fee” to the outstanding amount by comparing their information to your records.
Collection Accounts on Credit Report: Settling the Debt
In those situations where the debt is both accurate and recent, you may have no other choice than to settle the debt. However, you should first make sure that the collection agency is the one who has possession of your debt.
When a collection account has been bought and sold multiple times, it can be difficult to follow the paper trail and find out who actually owns the debt. Also, you may find that the original creditor will still accept payment if they are using the debt collection agency for their own in-house collection services, rather than selling the charge off account.
What You Should Know:
You may not have to pay the entire amount of the past-due bill. Often, collection agencies will take less than the original amount due. However, they are also much less likely to remove the collection from your credit report if it is not paid in full.
Professional credit repair companies can be helpful in this situation, as they can often speak with the collection agency on your behalf to work out a solution that you can stick with.
What You Can Do:
Make sure you have all the relevant information about your debt and the collection agency. Be prepared to negotiate and don’t promise to pay more than you can afford. If possible, get the collection agency to agree to remove the collection account from your credit report once the payment clears.
While there are no quick answers for getting collection accounts on your credit report removed, patience and persistence does pay off. If you regularly dispute the inaccurate information on your report, you can increase your credit scores and qualify for the level of credit that you know you deserve.