Maintaining a good credit score is essential for securing favorable terms on loans, credit cards, and other important financial transactions. However, many people find themselves grappling with the after-effects of previous financial missteps, with collections accounts negatively impacting their credit history.
When a debt is sent to collections, this means the lender has forwarded it to a debt collection agency instead of trying to collect it from you directly. This reflects negatively on you as a debtor and can lower your credit score.
Accounts that are sent to collections are viewed as seriously delinquent, which can deter potential lenders from loaning you money because of your credit score. The good news is that you can use reputable credit repair programs to remove the collections from your report and regain financial control.
How Long Does a Collection Stay on Your Report?
A paid collection account will stay on your credit report for up to seven years from the original date you first fell behind on the account. This means that even if you pay off the collection amount, it will stay on your credit report until the seven year period is complete. However, having a paid collection amount on your report reflects much more favorably than an unpaid amount, so paying it off as soon as possible is always a good idea.
It’s also important to note that the impact of a paid collection amount on your credit report lessens over time. If you continue to maintain a positive credit history on your other accounts and avoid new negative events, your credit score will improve.
Can You Remove Paid Collections From Credit Reports?
If you don’t wish to wait the full seven years for a paid collection item to be removed from your report, you may be wondering whether it’s possible to get it dropped off earlier.
The answer is yes–it is possible to remove paid collections from your credit report before the seven year period has passed. However, this is not always a straightforward process.
How to Remove Paid Collections From Credit Reports
There are two ways to remove paid collections from your credit report. These are:
Goodwill Deletion
A ‘goodwill deletion’ is the only way to remove a legitimate collections item from your credit report.
You’ll need to write a letter to your lender, explaining your circumstances and why you need the record to be deleted from your report. If this is the first stain on your credit history, lenders will often agree to a goodwill deletion and have the paid collections removed from your report.
Give It Time
If the collection on your report is legitimate and your request for a goodwill deletion is denied, it is unlikely you can remove it from your reports easily. In this case, the best plan of action is to pay off your collection as soon as possible–this shows future lenders that you are financially responsible and take your debts seriously.
Once you’ve paid it off, you simply need to wait for the account to be removed from the report in due time. Its impact on your credit score will diminish over the years, so use the seven years to build good credit habits and boost your score in the meantime.
Wrapping Up
Yes, it’s possible to remove paid collections from your report. However, the only way to remove them is to write a goodwill letter to your lender. If your request is rejected, you’ll need to wait out the seven-year period.
Wondering whether other credit bureaus have to remove a dispute if one of them does, or how it takes for your credit to improve after you pay collections? Don’t miss our recent articles!