Removing Collections From Your Credit Report

Published January 15, 2013 by

Sometimes, credit reports seem to play by their own rules. Rest assured, though; credit reports are definitely governed by rules and laws. Understanding this allows you better leverage when it comes to managing not only your credit report but the information contained within.

This is particularly true with collections and how they appear on your credit report. Having collections noted on your report does have a negative impact on your credit score and should be dealt with immediately upon you learning of their notation. In many cases there are steps you can take to have collections removed from a credit report. The process to get rid of the problematic items is not an easy one, but the rewards of going through it are worth the time and effort it will take you to have the items expunged.

Dispute an Item if It Is Not Your Debt

If a collections item noted on your credit report is invalid, disputing it is the easiest way to have it removed. If this is not your debt, you are not legally obligated to pay the balance owed and collection agencies are not allowed to list the item on your credit report. To have the erroneous item removed from your report, you will need to use the standard credit report dispute process. It is worth remembering that three different credit bureaus (Equifax, TransUnion and Experian) generate your credit report, and you will need to contact each of them as part of the dispute process.

Dispute an Item if It Remains After Seven Years

Past-due accounts are legally allowed to remain on your credit report for seven years from the date when they first became delinquent. Collection agencies will often misrepresent the reporting date and attempt to collect on the debt. Not only does this allow them to get money from you, but it also further damages your credit by resulting in you having a lower credit score. If the seven-year reporting period has passed and an item is still noted on your credit report as being in collections, you need to dispute it.

Dispute a Collection Account When It Is Sold

Collection accounts, like loans, often change hands from one collection agency to the next. Chances are good the agency attached to a collection account on your credit report is not the original agency. When this occurs, you can formally dispute the item with the three major credit reporting agencies.

Negotiate With the Collection Agency

Simple disputes do not always lead to a collections item being removed, leaving few alternatives. One option is to negotiate with the collector on the account and offer to make a payment in exchange for the account being removed. Be sure all correspondence is written and sent via certified mail with return receipt requested to allow for proof of receipt. In cases like this documentation is critical. Make sure you note everything, including the names of agents spoken to, the time and date when you spoke to them, and any pertinent information discussed during the conversation. Phone calls need to be followed up with documents.

Make no payment until the appropriate documents are forwarded to you and you agree to the terms within. Only then should you allow payment to be made. Once payment is made sufficiently, be sure to monitor your credit report to be certain the collection agency follows through with the terms of your agreement. If it does not, dispute the action with the credit bureaus, the Better Business Bureau, and any other legal entity.

It Is a Process

Removing collections from your credit report takes time and can be a frustrating process. Remember to stay focused on your end goal, however, and be sure to keep any documents that are related to the removal process. Having collection items expunged can only help you, as it will ultimately result in a cleaner credit report and a stronger credit score.