Many people will find themselves in a tough financial situation, or they might simply just forget about a specific debt that they might owe. When a bill or debt goes unpaid for a prolonged period of time, it can be sent to a collections agency.
Collection debts can damage credit scores. However, they can be removed and reserved, where the negative effects can be completely revoked through a Pay for Delete option.
This strategy can be a bit intimidating, and there is no guarantee that it will work; however, if you negotiate well, you can improve your overall credit. We will explain the process of Pay for Delete and how credit repair services in Atlanta, Georgia can help.
Pay for Delete and Its Role
Pay for Delete is a procedure of paying and requesting the removal of a derogatory item from a specific individual’s credit report. This means that the individual can offer to pay for some or all of the amount owed, with the goal of having the debt collector remove it from their reports.
Typically, these deals will not work with the original creditor, but a third-party debt collection agency is more likely to agree. By knowing the right steps, anyone can beat national credit systems, so to speak.
Why Someone Might Go for the Pay for Delete Route
Whenever you utilize a loan or credit, always pay on time and in full. If you miss even a single payment, your credit can be negatively impacted. Allowing a bill to get to a point when it gets sent to collections can be even more detrimental to your score. If you are curious about another option, such as canceling your Self Lender account, that is also an option.
Pay for Delete has the potential to help improve someone’s credit score by removing a negative entry from the credit. This is a process in which the borrower agrees to pay off their collections account in exchange for having their error deleted from their credit report.
Accounts sent to collections remain on a customer’s credit report for seven years. New accounts can be a lot more harmful to credit when compared to older ones, so the negative impact can decrease until the account disappears from a customer’s report fully.
It’s important to note that collection agencies are supposed to report accurate, complete information, and Pay or Delete is not typically accepted. Many agencies discourage this practice. However, this isn’t prohibited under the Fair Credit Reporting Act, so there will be debt collectors that might accept this offer.
Why Paid in Full Might Be Superior
There is also the option for the borrower to pay the bill in full, even without the Pay to Delete offer. If the borrower is able to get a Pay for Delete, it can help their credit. A collection account, which has been paid in full, can also reflect well on an individual’s credit report.
If the individual is in a position to pay it in full, doing so can save a lot of hassle, especially when it is the only collection account that they have. We recommend this option over a Pay for Delete.
Making the Right Decision
Paying off a debt completely can also provide benefits. It stops all collection calls permanently, meaning debt collectors and creditors alike will have no reason to hound you for payment when there are no outstanding obligations. Your mental health will improve when you don’t have the stress of the outstanding debt or the harassment from creditors.
This step will be noted in the credit report as fully paid when debts are paid off. A fully paid collection looks better to future lenders or screeners than one that has been settled for less than what was owed. The collection account will make less difference to the overall credit score as time passes–this is because it will drop off fully after seven years.
Moving Forward With Payments
Not every item noted in a credit report affects your credit score. Some factors can affect the score more than others, and collection accounts are starting to affect an individual’s score much less than they have historically.
Many consider Pay for Delete an outdated practice, as paid collection accounts are ignored throughout the latest credit scoring models. While the account is still on a credit report, it can do a lot less damage when compared to not paying the account entirely.
Want to fully understand your options or find other ways to improve your credit? The Phenix Group can connect you with experts to improve your financial literacy and feel empowered by your credit.