Collection Removed From Credit Report and Placed Back on My Credit Report

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When you default on a debt obligation, your original creditor will sometimes sell your debt to a debt collector or collection agency. Once your debt ends up in collections, this negative information is usually reported to the three major credit bureaus—Experian, Transunion and Equifax—and damages your credit score.

After a certain period of time, a collection account must be taken off of your report. If you want to remove it sooner or believe it's an error, you can take several actions to try and remove it from your credit report.

Here, we'll walk you through the three steps you can take to remove collection accounts from your credit report.

1. Do Your Research & Check All Credit Reports

To get details on your collection account, review all of your credit reports. You can do this by visiting AnnualCreditReport.com. Normally, you can only get one free copy of each report annually. However, due to the Covid-19 pandemic, you can check your reports from all three credit bureaus for free weekly until April 20, 2022.

Your credit report should list whether the collection is paid or unpaid, the balance you owe (if any) and the date of the account's delinquency. If you don't know who the original creditor is and it's not listed on your report, ask the collection agency to give you that information.

Afterward, compare the collection details listed on the credit report against your own records for the reported account. If you haven't kept any records, log into the account listed to view your payment history with the original creditor.

2. Determine the Account's Legitimacy

While reviewing the collection listed on your account, make sure the debt belongs to you. If it doesn't belong to you or you made on-time payments to pay it off, dispute the error to remove the collection from your report.

3. Choose a Plan of Action

Here are three actions you can take to attempt to remove collection accounts listed on your report.

1. Dispute Inaccurate or Incomplete Collection Accounts

If you have inaccurate or incomplete collection accounts on your credit report, the Fair Credit Reporting Act gives you the power to dispute this information directly with the credit bureaus or creditor. You can send a dispute using the dispute form on each credit bureau's website. The Federal Trade Commission has sample dispute letters on its website if you need help crafting one.

After you submit your dispute, a credit reporting company has 30 days to investigate your claim. If the credit bureau finds the provided information correct, the collection account will be removed from your report. However, if it finds that the company reporting the information was correct, the collection account will stay on your report for up to seven years.

2. Ask for a Goodwill Deletion

If you have a paid collection listed on your report, you can simply ask the debt collector or original collector to remove the collection. This usually involves sending the debt collector or collection agency a goodwill deletion letter explaining your mistake, asking for its forgiveness and showing them how your payment history has improved.

With this option, there's no guarantee your collection will be removed from your credit report, but it's worth a shot. If the account is removed, it may help you qualify for better terms on personal loans, mortgages and credit cards.

3. Wait Until It Falls Off

When the debt in question is legitimate and you can't convince the debt collector to delete it from your report, your only remaining option is to wait. After seven years from the date the account first became delinquent, the collection should fall off of your credit report.

Although this means the collection will continue to impact your credit score; its impact will lessen as time passes.

How Long Do Collection Accounts Stay On Your Report?

Paid or unpaid collection accounts can legally stay on your credit reports for up to seven years after the original account first became delinquent. Once the collection account reaches the seven-year mark, the credit reporting companies should automatically delete it from your credit reports.

If your collection account doesn't fall off of your credit report after seven years, you can file a dispute with each credit bureau that lists it on your report.

How Do Collection Reports Impact Your Credit Score?

While a collection report usually causes serious damage to your credit score, how much it impacts it depends on which credit scoring model you use to calculate your score. It also depends on whether the collection account is paid or unpaid. For example, FICO Score 9—the latest version of the FICO credit scoring model—doesn't report paid collection accounts.

Earlier versions of this credit scoring model, however, do include paid collection accounts. If a lender uses an earlier model to assess the likelihood you can repay a loan, it's likely that it will see a lower credit score if you have a paid collection account listed on your credit reports.

Will My Credit Score Increase If a Collection Account Is Removed?

Since payment history accounts for 35% of your FICO score, your score might build if a collection account is removed. However, how much it increases will depend on other items listed in your credit report. For example, if this negative account is the only one listed on your credit report, removing it could boost your score more than if you had several other collection accounts on your report.

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Experian can help raise your FICO® Score based on bill payment like your phone, utilities and popular streaming services. Results may vary. See site for more details.

Bottom Line

When you have a legitimate collection account listed on your credit report, it'll likely remain on that report for up to seven years. To remove the collection account from your credit report early, you can ask a company for a goodwill deletion, but there's no guarantee you'll receive forgiveness.

If you have a collection account on your report that's inaccurate or incomplete, dispute it with each credit bureau that lists it on your credit report. This will help you remove the collection account from your credit report.

Collection Removed From Credit Report and Placed Back on My Credit Report

Source: https://www.forbes.com/advisor/credit-score/how-to-remove-collections-from-credit-report/

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