Can I Get a Paid Collection Account Off My Credit Report?

Having a collections account noted on your credit history can have a negative impact on your finances. Maybe the negative item has dropped your credit score too low to get a good interest rate on a car loan, or maybe the reminder that you weren’t always able to pay your debts on time is making new creditors hesitant to lend you credit at all. Having this account on your credit report isn’t doing you any favors, but you’ve worked hard and you’ve paid off the collection account (or are about to pay it off), so now what?

The good news is that a paid-off collection account will come off your credit score eventually. The challenging news is that it isn’t usually possible to get this account taken off your credit report proactively. You can ask your creditor to take the account off your report - either as a condition of your full payment or as a matter of good will - but no creditor is obligated to honor this request. Thankfully, there are other ways to boost your credit score to offset the collections account currently noted on your credit history. 

Ways to Get a Paid Collection Account Off Your Credit Report

A paid collection account will not disappear from your credit history just because you’ve paid it off. It will stay there until the statute of limitations has passed, which is at least seven years in most cases. You cannot have it removed by contacting the credit bureaus and requesting it be removed. They will keep that item on your credit report until the statute of limitations has passed, but they are required to remove it once this period of time has elapsed. If the statute of limitations has passed and the account is still on your report, you can then call the credit bureaus and tell them to remove it. 

You can proactively ask a creditor (including an original creditor, debt buying company, or collections agency) to remove a paid account from your credit report. You can make this request as a negotiating incentive before paying the account or you can ask your creditor for a goodwill deletion after paying your account. Both options are explored below. 

A Note About Credit “Scoring”

Paid collections look better on your payment history than non-paid items. Paid-off collections no longer affect your credit score under newer credit scoring models, such as the FICO score 9.0 and VantageScore 3.0 and 4.0 models. VantageScore is a relatively new credit scoring model that has sprung up in recent years as an alternative to the traditional FICO scoring models. Unfortunately, many lenders still use older credit scoring models whereby paid-off accounts still count against a borrower’s score. 

What does this mean for your situation? If you are trying to improve a VantageScore credit score, you don’t need to worry about getting paid collections accounts off your credit history, as they have no negative impact on your score. If you are trying to improve a FICO score that is pre-9.0, you may benefit from trying to get a paid collections account off your history. 

What if the Information Listed on Your Credit Report Is Wrong?

It is important to immediately dispute any debt that is not being reported accurately on your credit report(s). Each credit bureau receives information from creditors, although not all creditors report to each bureau. It’s important to pull a free credit report from each of the credit bureaus on an annual basis for review, if not more frequently than that. 

If an item shows up on your report as not being paid or the amount of the debt reported is larger than the actual debt (or any other kind of inaccurate information is listed on your credit history), don’t hesitate to write a dispute letter to all three of the major credit reporting agencies (Experian, Transunion, and Equifax) as well as VantageScore and dispute the inaccurate information. The Fair Credit Reporting Act (FCRA) legally requires these companies to remove any item in question until it has been either verified or corrected. Make sure you only contest inaccurate information, though; trying to dispute accurate information will only hurt you in the long run. 

Asking a Creditor to Remove a Paid Account from Your Credit Report

If the collections activity listed on your credit report is accurate, you can ask the debt collection agency (the company that bought your debt from your original creditor) to remove the paid-off item from your credit report. If they agree to remove this item, it will be removed. If they will not remove it, then your only alternative is to keep the debt on your credit report until the statute of limitations has been satisfied. If you haven’t yet paid your debt, you can try to get the collections agency to agree to remove the item once it is paid off. If you’ve already paid the debt, you don’t have much bargaining power but you can ask your creditor to take this action on your behalf as a gesture of goodwill.  

The simplest and most direct method of getting a paid collections account removed from your credit report is to simply write your creditor a goodwill letter asking them to remove this account from your credit history. This may or may not work, depending most likely upon the size of the account and when you paid it off. But in many cases, as outlined above, the creditor will not grant this request because of the contracts that they have with the credit bureaus. 

You may be able to get some of your debts temporarily frozen by the credit bureaus, but this will not be permanent. If they are able to validate a specific debt, then it will quickly reappear on your credit report. The usual waiting period is 30 days, but after that, your accounts will most likely reappear on your credit report. 

The “Pay For Delete” Alternative

If you haven’t yet paid off the account you hope to delete from your credit history, you may benefit from a “Pay for Delete” arrangement. This is the term used when a borrower pays a debt in full, and - in exchange - the debt collections agency agrees to remove the item from the borrower’s credit report. 

Many debt collection agencies will not remove paid-off delinquent accounts because they have contracts with the credit bureaus that require them to keep accurate information on your credit report for as long as possible. The contracts have this clause written into them because the customers of the major credit bureaus want to see these items. This way, they can make more informed decisions about whether to offer credit or a loan to a given borrower. If a paid-off collections account shows up on the borrower’s credit history, the lender may charge the borrower a higher rate of interest or even decline to extend credit, in some cases. This is permissible under the Fair Debt Collection Practices Act. 

If a debt collection agency or debt collector was to violate its contract with the credit bureaus by removing an accurate paid-off account from a borrower’s credit history, then it could lose its contract with the bureaus and thus go out of business. 

If you attempt a pay for deletion arrangement, you’ll want to get this type of agreement in writing before moving forward, or else the agreement may not be honored by your creditor. Remember, creditors are often reluctant to enter into such arrangements because they may violate the terms of the contract that they have with the credit bureaus. So, don’t get your hopes up too high if you move forward with this strategy. 

If There Is Inaccurate Information on Your Credit Report

If you are hoping to delete a paid-off collections account from your credit history so that you can immediately boost your credit score, there are other ways to go about achieving that aim. While raising your score to any significant degree takes time, patience, avoiding late payments, and a dedication to good debt management habits, working with a credit repair organization can help you boost your score quickly. This is a good approach to consider if you’re trying to raise your score by a small amount to secure better terms for a major upcoming purchase and there is inaccurate information reported on your credit history.  

Hire a Credit Repair Organization

Although credit repair organizations ultimately can’t do anything that you can’t do yourself for free, working with them can be helpful if you are uninterested in making credit dispute efforts on your own. Beware of any type of credit service company that guarantees you that they can raise your credit by at least a certain amount or make negative information that is accurate disappear. It is illegal to remove legitimate negative information from your credit report, regardless of who actually does it. These firms are ultimately governed by the Credit Repair Organization Act (CROA). This means that any credit repair firm that promises to help you must adhere to the following requirements:

• They must advise you of your rights in a written contract that clearly outlines the details of the services that they will perform

• They must give you a 3-day right of rescission that you will have in writing, where you can cancel within the first 3 days without any fees being assessed

• They must tell you in writing how long their services will take

• They must tell you upfront exactly what they will charge for their services

• They must disclose any guarantees that they make in writing before you sign any contract

If the credit repair company that you hire does not furnish you with this information before beginning to work on your credit, then you have several recourses of action that you can take. The first step is to file complaints with the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). The FTC has the enforcement power in this case, so file your complaint with them first. Then you’ll need to file a complaint with your state’s attorney general (AG). If all else fails, you can sue your credit repair company in federal court. 

Let’s Summarize...

Having good credit is one of the bedrocks of personal finance. Removing paid-off collection items from your credit report isn’t usually an option. But, you have nothing to lose by contacting your creditor before you pay off the account to set up a “pay for deletion” arrangement. Similarly, you have nothing to lose by contacting your creditor after you have paid the item in question off in full and ask them to remove it. If they are willing to make a goodwill deletion, then the matter will be settled. If they will not, then you’ll have to wait for the statute of limitations to expire so that the collections account “falls off” your credit report of its own accord. In the meantime, you can devote your energy to improving your credit score via alternative means.