Pay For Delete Letters
For some reason you have bad credit whether it comes from a default on student loans, a high interest loan you thought you might sign and agree to. Whatever the reason you managed to get yourself into financial trouble whether you knew it or not, and now you know that you should do something about it, otherwise you will have a mark against your credit score because of this unpaid debt. So here you are on this web page looking for a solution. You can’t ignore the issue; you know that the creditor will be reporting the non-payment to the credit bureaus — but is there really something you can do to help prevent this strike against your credit report? Can you come to terms with the creditor and have the credit collection removed from your credit score?
Get The Information You Need First
Yes, there is something you can do about it. The first thing you need to do is get a copy of your credit report. the Fair Credit Reporting Act gives consumers the right to get 2 free credit reports per year. It is important that you take advantage of this offer on all three of the credit bureaus websites: Equifax, Experian and Transunion. You want to visit the website of all three bureaus to make sure that the same information is located on each. If you dont wish to order your report online you can also get their mailing address here and make a request in writing asking them to please send you a copy of your free credit report. This will take a few days for deliver to come through the mail but that gives you the perfect opportunity to review and check every detail and to see which creditor or card is reporting the default of payment. You can check all of your accounts to see which are labeled as unpaid. Don’t worry too much if your score varies slightly from one report to another, this is often the case as not every creditor reports to every bureau. However, it is likely that a default loan, card, mortgage, auto loan or other type of large debt be reported under all three bureaus.
Once you have your scores in hand you want to look for any collection account information. Note the number of outstanding debts you have. It is on the report that you’ll see who the original creditor is, the date the account went delinquent and who is offering the collection services for the account. Underline and follow the companies who report the bad credit and if you haven’t received a letter from the collection agency, find the company by conducting a search on Google. This will tell you how well known the collections company is and what their services are. This information will help you make a better agreement when you are going to negotiate with the collectors. With this information in hand you are ready to work on your credit repair and eliminate those marks against your credit history from those loans you may have defaulted on.
Then before you take your creditors on you want to do some research, read articles and research links that lead to student credit repair, credit repair service which will give you various options to repair your credit.
The Pay for Deletion Process
The first step you want to take when trying to clear your bad credit balance is to try to get the finance collections company to agree to a “Pay for Deletion process. This is a process which is legal by U.S. law where you can offer to pay the debt in return for the clearing of your name and the removal of the information regarding your debt. This can be the fastest way to get your credit scores updated for you but it can also go both ways for you. In some cases, especially with some of the smaller companies it is easier to negotiate, but when there is a top collections company involved this can be nearly impossible.
In many cases a popular credit collections agency has a policy in place that prevents him from removing bad credit information on your credit report even after you pay it, despite any dispute you may make. Having these types of practices in place can make it hard to negotiate a pay for deletion process. However, The process can often be simpler with a smaller company. At any rate, it doesn’t hurt to try. You can find a sample pay for delete letter online, and all you have to do is substitute your personal information for the generic data in the letter. If you ask the collection agency to remove the personal debt in exchange for payment, he might consider conceding the request. And when you only have one or two debts against your credit reports then this can be a practical way to settle the debt and clear your name so you can later get positive responses to future financial resources.
Why Is This a Good Way to Clear Debt?
In the past, this was a process many consumers used because it was the fastest and least complicated of the credit repair products on the market. All you needed to do was to ask the bureaus to provide your free credit report letters and once you received them, you could quickly view what the debt was. You could save time by writing a letter to the collections agency requesting removal in exchange for the payment of the products or services rendered. You just had to get a guarantee of the removal in writing and you were set. The process also worked for the collections agency as well because they collect and make money. It was a win-win situation for everyone and you would receive benefits.
However, the pay-for-delete process is not now a common practice and it only works occasionally. Today a positive response is harder to get when dealing with consumer debt from credit cards and other large creditor debt removed in this way. Some creditors dont even consider it as an above board action.
That being said, there are about 10% of all credit collection agencies that look for a quick resolution and will consider this as a viable option, providing you pay what you owe off in full using your savings, cash or a loan. Sometimes they may even consider this option when you negotiate lower payment options. The reason they agree is because they want the payments and don’t want to continually spin their wheels trying to collect.
Most expert credit counselors suggest you might have better success with this type of solution when you make the request from one of the smaller collection agencies. In fact, the smaller the collection agency, and the smaller the debt, the more likely they will be to agree to such a request. That’s why we suggest you do some due diligence, read and learn about the creditor before making you write the creditor.
Understanding the Debt Process
Once a debt goes delinquent it is sent to a collection agency and reported to the credit bureaus as a bad collection. This leaves the strike against your credit and can stay there for up to 7 years. It is the strike that can bring down your credit score and prevent you from getting credit or cards anywhere else in the future. But life is changing and so are the laws regarding credit. Credit is the essence of the nation and since so many consumers have credit issues FICO is making changes that benefit everyone.
Recent Changes to FICO Evens Things Out
New changes to the FICO scoring model law, FICO 9, make paying off bad debt that has already hit the collections agencies a viable option in clearing the debt from a consumrs credit history and a way of preventing negative impact from being provided to credit scores. This new change will prevent unpaid debt fromt negatively affecting credit providing the collection is paid in full. The law also minimizes the weight of unpaid medical bills.
There is one drawback to the newly featured FICO scoring model though. Even when you do pay the debt, the collection stays on the report but is marked as paid.
Does It Really Work?
In the last few years the credit bureaus have come down on the collection agencies that accede to the pay-for-delete option. The reasoning is simple; it is the unethical removal of accurate information and belies the reasoning for the credit history process. The pay for delete letters worked more efficiently in prior years than they do now.
So, can you still get a collection to come off your credit report when you pay it?
The below options might be three situations where you could get a credit collector to agree to the pay-for-deletion process.
- You didn’t get the bill
If you moved and the bill wasn’t forwarded to the new address or maybe you were in a coma, then you might convince the collection agency to get a pay-for-deletion
- The bill comes from a medical crisis
A medical collection is different from other types of unpaid debt. These don’t necessarily imply you are a credit risk according to FICO, so there is less weight on these debts. In these cases a collection agency is more likely to agree to delete the debt.
- The creditor is not from a big creditor or bank
You won’t be able to get rid of a credit card debt but you have a better chance of being able to remove original debt from your record when it is owed to a smaller creditor like a cellphone, dental, utility or medical bill.
When your situation isn’t one of these three don’t give up hope. You can still ask the creditor if it is possible. It can never hurt to ask. And if they wont go for it, don’t worry, there are still other options to clear your credit records. There are forums you can join to find information and learn of other ways to eliminate credit problems from lenders.
Here are a few other things you can try to make a debt collection disappear from your credit score. We’ve come across these options in reading other content and posts from financial advisers and credit repair experts.
- Contact the original creditor
Contact the business where the money for the student loan, debt or item was first owed. If the creditor still owns the debt but has sent it to an agency in exchange for a percentage of the debt, you might still be able to ask if they original creditor can take back the account and you can work out a settlement with them directly. If they do this the the debt has to be taken out of collections and it comes off your credit report.
- Call the collections agency
Everyone touts the pay-for-delete letter but no one contacts the collection agency directly. Try calling the debt collector and take a softer approach. Explain that you intend to pay but would like to get the collection deleted from your credit report. This works well because when you are talking to someone directly you also have a chance of clearing up any questions you might have with regard to the debt.
- Offer proof
If you are claiming a special reason for not making the payment and allowing the debt to go to collections then show proof of the reason. For example, if the bill was sent to a wrong or old address offer evidence that you lived at another address during the time it was mailed. Even some of the most reserved credit collection agencies have been known to make a concession for this reasoning.
- Make sure you get a guarantee in writing
When a collection agency does agree to remove the collection if you pay, then ask for a letter confirming this pay for delete agreement. You can even ask for an email.
- Pay anyway
It is always better to have a collection that you paid rather than one that continued to be for an unpaid amount. Some of the new credit scoring methods don’t count paid collections. When you pay, your credit report will update to a paid status and over time the harm will lessen and won’t negatively affect your score.