How to Remove Paid Collections from a Credit Report

Posted by in Credit Scores | Updated on August 30, 2022

Imagine that you couldn’t pay a debt, and now a debt collection company has been sent to collect money from you. This is horrible and stressful, but luckily you recently got a new job and can repay the debt. When you next check your credit report, you are shocked. The paid collection is still on your credit report, and it is ruining your credit score. Now you need to find out how to remove paid collections from a credit report.

A collection, paid or not, represents a seriously delinquent account. They will have a significant, negative impact on your credit score. Lenders don’t want to give money to someone that has a bad record of repaying their debts.

If you don’t want to wait seven years for the paid collection to drop off your credit report, you may be wondering how to remove paid collections from a credit report.

There are several strategies to remove erroneous collections from your credit report. If the paid collection was legitimate, you can consider asking your lender for a goodwill deletion of the collection from your credit report. If all else fails, you have to wait until the paid collection drops off your credit report. At that point, your credit score will recover.

How Long Does a Collection Account Stay on a Credit Report?

The Fair Credit Reporting Act lays out that the collection has to stay on your credit report for up to seven years from the date of default on the original account. This is to give lenders a clear picture of your financial behavior so they know the risks of lending you money.

However, on a credit report, a paid collection can still stay on your credit report for up to seven years, regardless of whether the account has a $0 balance.

After seven years, the paid collection will automatically drop off your credit report.

Can Paid Collections Be Removed from a Credit Report?

If you don’t want to wait seven years for the paid collection to drop off your credit report, you may be wondering how to remove paid collections from a credit report.

When a debt is said to be “sent to collection” it means that the lender has given up on trying to get that money from you. Instead, they have employed a debt collections company to pursue the debt. This is bad for your credit report because it reflects badly on you as a debtor. 

Accounts that get to the collection stage are considered seriously delinquent. It means that someone lent you money but you didn’t repay it even after they did everything in their power to get you to pay it back. They had to send a debt collections company to try to collect money from you. Lenders don’t want to give money to someone that has a bad record of repaying their debts. A collection will have a significant, negative impact on your credit score. 

The problem is that, even if you then pay off this debt through the debt collection company, the collection still remains on your credit report. So even if you no longer owe the lender money, your credit score will still be negatively affected.

Luckily, there are some strategies you can employ to get paid collections removed from your credit report.

How to Remove a Paid Collections Account from Your Credit Report

If there has been an error, you can file a dispute and have a paid collection removed from your credit record. If the paid collection is legitimate, it can be very difficult to remove a legitimate collection from your credit report.

Credit Bureau Error

After seven years, the paid collection will automatically drop off your credit report. If it doesn’t, this means that the credit bureau has made an error. File a dispute with any credit bureau that still lists the debt. Make sure you have all your documentation in place to prove the original date of delinquency. 

Debt Collector Error

If you think there is an error on the part of the debt collector, ask them to validate the debt to make sure it’s yours. If the collector can’t validate the debt, the collection should be removed from your credit report. Follow up to make sure.

Goodwill Deletion

A goodwill deletion is the only way to remove a legitimate paid collection from a credit report. This strategy involves you writing a letter to your lender. In the letter, you need to explain your circumstances and why you would like the record of the paid collection to be removed from your credit report. A lender will sometimes agree to a goodwill deletion if this is the first stain on your credit history. 

Give It Time

If the collection was legitimate, it is unlikely that you will be able to remove it from your credit reports. In this case, you should still pay your collection. This shows future lenders that you take your debts seriously. 

Then you simply have to wait for the account to be removed from your credit report in due time. A paid collection can only remain on your credit report for seven years. Its impact on your credit score will dissipate over time. Use the seven years to build good credit habits. 

How Many Points Can My Credit Score Increase if a Collection Is Deleted?

Late payments, skipped payments, and collection accounts are all factored into your credit score. Accounts that get to the collection stage are considered seriously delinquent. They will have a significant, negative impact on your credit score

There is no fixed number of points that a credit score can increase if a paid collection is removed from your credit report. Each individual’s credit score will be differently affected.

However, if the collection has lowered your score by 100 points, getting it removed from your credit report can increase your score by 100 points.

Learn More About Credit Scores

If it’s not clear from everything above — your credit score in the U.S. will be an essential part of living in America on a visa. That said, there are lots of other important topics around credit scores that it would be worth it to familiarize yourself with:

Beyond that, there are important topics things to know, like how to remove late payments, how to remove collections from your credit report, and how much will your credit score go up when you clear collections?

It’s crucial that you understand these things if you want to make the most of your financial freedom in the U.S.!

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Categories: Credit Scores

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