Can Collections Be Removed?

This is a very frequently asked question – It is possible to have a collection removed from a credit report? The best answer would be…sometimes. A lot depends on the type of collection, the amount of the collection and the policies of the collection agency.

Technically, a collection will stay on a credit report (paid or unpaid) for seven years from the first date it went delinquent with the original creditor. Paying it off will not automatically remove it from a credit report – it will just show as a “paid collection.” Therefore, it will continue to have a negative impact on the credit score. A collection, no matter what the dollar amount or who the original creditor, can affect a score by more than 100 points depending on what the rest of the credit report looks like.

Currently, there are many different scoring models in the market. Some of the newer models, for example, eliminate any medical collections from the scoring algorithms. Although different industries use different scoring models, the ones used by Fannie Mae and Freddie Mac (for mortgage scores) are older models that factor in all collections. Personal scores (scores obtained online or from the bureaus) are not affected by medical collections, but keep in mind that personal scores are also not utilized by any industry as a determination of credit worthiness.

In addition, some types of collections may be easier to remove than others. For example, a collection agency collecting for a defaulted credit card is not going to agree to remove their entry under any circumstances. Medical collections however can be a different story. Many medical collections show up as a complete surprise to the borrower, as they were under the impression that insurance had covered everything. More often than not, they had no idea there was an outstanding balance and have never been contacted by the collection agency. Some collection agencies will agree to remove their entry once the account has been paid, especially if it is a small amount – less than $100.

The first thing to do in this case is call the collection agency and ask to speak to a supervisor or manager. Explain to them that you thought insurance had covered this and you would be happy to pay it if they will agree to remove it completely from your credit report. While they do not have to remove it, there is a good chance that they will. It is also a good idea to contact them at the end of the week. It may sound silly, but never call a collection agency on a Monday. If they do agree to a removal, be sure to get it in writing from them.

If the collection agency refuses to remove it, try going back to the original creditor to see if they will take the payment from you and ask for a “goodwill deletion” in return. This is saying to them that going forward in using their services this situation will not happen again. If the outstanding balance is not high, and nothing like this has happened previously, they might just agree to a removal. They will then contact the collection agency and recall the debt at which point the collection agency will have to remove it, as they will no longer have the debt.

Attempting to have a collection removed is never easy and can be very frustrating, especially since legally it can be reported it for seven years. Nevertheless, considering the impact one small collection can have on a credit score it is worth a phone call, because it really does not ever hurt to ask.

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