Your Guide: How To Remove Collections From Your Credit Report

You may have heard advice suggesting you check your credit report regularly, both to keep tabs on your credit health and to search for errors. Knowing how to remove collections from your credit report can help your financial situation, especially if you're applying for a mortgage or other type of loan. Let's find out why there might be collections on your credit report and explore strategies for removing them.

Collections On A Credit Report: What You Should Know

Collections on your credit report show that a certain cost is unpaid, whether it’s a medical bill, credit card bill, or other type of cost. That cost is in “collection” because the original creditor sent it to an agency that specializes in collecting unpaid debts. At that point, the creditor decided that getting a debtor to pay the bill wasn’t worth the effort.

By the time your bill gets to a debt collector or debt settlement, it typically means you have been past due for a while, often more than 3 months. And the longer the bill has been unpaid (180 days compared to 30 days, for example), the more damage it can do to your credit score.

When you fail to pay a bill, your creditor reports it to the three major credit bureaus, Experian^TM, TransUnion^® and Equifax^®. It then becomes part of your credit history and mars your credit score.

How Collections Can Impact Your Credit Score

Future creditors and lenders use your credit score to determine whether you are a responsible borrower. Collections can lead to bad credit, which makes you a more risky borrower to the lender and can impair your ability to access credit with the best terms and lowest interest rate. Having the collection removed or disputed can help in potentially boosting your credit score, but it still remains on the credit report for 7 years. How much it impacts your score also depends on the credit scoring model the bureau uses.

How Long Collections Stay On Your Credit Report

A collection activity will typically remain on your credit report for 7 years after the account becomes delinquent. Even if you've already paid off the collection, it still will not be removed from your credit report. That’s right: Even paying the bill in full won’t fix the problem.

Although that seems unfair, your credit report is designed to show future creditors how responsibly you pay your bills. On this one at least, you didn’t hold up your end of the bargain. The fact that a collection can continue to affect your credit even after it’s paid off should tell you why it’s best not to get to that stage. That's why it's critical to avoid making late payments to keep your personal finances healthy.

How To Find Collections On Your Credit Report

What you don’t know can hurt you. You’ll want to know right away if you have any unpaid balances or – even worse – errors that have a negative impact on your credit. Fortunately, free consumer credit reports are readily available.

The three major credit bureaus will provide you a free credit report every week through December 2023. The agencies began offering this service in 2020 as a result of financial hardships related to the COVID-19 pandemic. After that point, it's likely they will revert to the previous rule, which was that they have to provide you with a free copy of your credit report once every 12 months.

To access your credit report, fill out a form at AnnualCreditReport.com that will connect you to those systems. Make sure to check all three of the credit reporting agencies. Although they most likely will have the same information, one of them could have an error the others don’t show.

Determine The Account’s Legitimacy

If you see something concerning, don’t panic. Sometimes a collection on a credit report can have inaccuracies. You could have been making on-time payments that weren’t properly recorded, or the debt may not be yours at all. If that’s the case, you may be able to dispute the error and have it removed. Incorrect entries could also be an indication of identity theft.

How To Get Collections Off Of Your Credit Report

Your first order of business should be to have the collection removed if you feel the debt collector has put it there in error. Maybe the account doesn’t belong to you, or the debt is reported several times.

But even if you do owe the money and it’s there legitimately, there's some good news. It won’t impact your credit forever. Collections will eventually fall off. However, there are steps you can take in the meantime. Let's review what you can do about both inaccurate and paid collections.

Inaccurate Collections

If you determine the information about the unpaid collection is inaccurate or incomplete in some way, contact one of the three credit bureaus and start the dispute resolution process. They're required to investigate and respond to disputes.

The Consumer Financial Protection Bureau (CFPB) has a sample letter template that can help you prepare your dispute.

Savvy borrowers will also want to gather as much documentation as possible for their dispute letter. These are documents that might help you resolve the situation:

Forms of ID: Driver's license, passports or military ID can verify whether the collection is using an incorrect name.

Proof of payment: Bank statements, receipts and canceled checks can help prove that you paid your debt. Be sure to verify the account numbers related to the collections.

Emails, phone records and other communications: Gather names and dates from any records you have of speaking with creditors or collection agencies.

Paid Collection Accounts

What if there's accurate information about a collection account you've already paid? Contact the collection agency or debt collector and request a goodwill deletion if the collection has already been paid off. This is particularly important if you have waited the 7 years that a collection typically remains on your account, and it still hasn’t fallen off.

If the collection is yours and doesn’t budge, don’t despair. A collection typically remains on your credit report for 7 years. After that time, the collection should fall off your credit report, even if it’s unpaid. While it will likely continue to impact your credit score, the negative effect will lessen over time.

When your account hits the 7-year mark, be sure to check your credit report to ensure that the collection action has been removed and contains only accurate information.

Pay For Delete: A Questionable Alternative

A debt collection agency might offer "pay for delete" as a way for you to erase the collection action from your credit history if you pay the account off. Borrowers can request this, as well, by submitting a pay for delete letter.

The Fair Credit Reporting Act (FCRA) doesn't specifically forbid this practice. Still, the purpose of the credit bureaus is to report complete information about borrowers, which conflicts with the concept of pay for delete. Also, creditors may take your payment without removing the information from the credit report. Borrowers will have little or no recourse since pay for delete exists in a gray area. Also, debt collectors can't remove negative information that the original creditor reported. Use caution and consult a financial professional before pursuing this option.

FAQs: How To Dispute Collections

Here are questions people often ask about disputing collections on their credit reports.

Can you get a collection removed from your credit report?

It's possible to get a collection removed from a credit report. If the collection is an error, major credit bureaus have a dispute process you can follow. Paid collections are more difficult, but it's possible that your creditor may be receptive to a goodwill letter requesting a deletion before the automatic deletion that happens 7 years after the account is declared delinquent.

How do I remove a collection from my credit report once paid?

One of the key disadvantages of having a delinquent account is the impact of having collections on your credit report. Still, creditors or collections agencies may be flexible if you request a goodwill deletion. It's most likely, though, that the paid collection will remain on your credit report for the full 7 years.

Do collections fall off after 7 years?

Yes, they do. Still, it's wise to check your credit report 7 years after the missed payment was reported to verify that it was deleted. While you're reviewing your credit report, check for other potentially negative items about your payment history.

The Bottom Line: It’s Possible To Remove Collections From A Credit Report

Your best bet is to keep your credit in top shape so you will be able to access the credit you want and need for a mortgage, car loan, student loan or other financial goals. And the better your credit score, the more attractive the terms you are likely to be offered.

If you find negative information like a collection agency notice in your credit history, it’s wise to address the collections. Although it might take several years for it to be completely removed, it will go away eventually. Be sure to check your credit report regularly and have a plan of action if you see a collection. Even better, maintain healthy personal finance habits, like paying your bills on time, every time, to avoid getting into this situation.

Monitoring your debts closely can prevent delinquent accounts and derogatory marks in your credit report. Download the Rocket Money℠ app and get in-depth visibility over your finances.