Depending on your specific circumstances, collection accounts can often have an extremely negative impact on your credit scores. Unfortunately, that negative impact does not go away quickly and can stretch out for many years since collection accounts are legally allowed to remain on your credit reports for 7 years from the date of default on the original account.
In most cases, even if you pay or settle your collection accounts they will not be removed from your credit reports. Paid or settled collection accounts are required to be updated to reflect your payment of the debt; however, they are still generally permitted to remain on your credit reports even after payment has been received.
Ways to Remove Collection Accounts
Since paying or settling a collection account will likely do little to nothing to actually improve your credit scores, many consumers search for ways to remove these credit damaging entries more quickly. However, having a collection account removed sooner than the required credit reporting purge date is actually extremely difficult. Early removal of collection accounts is not entirely impossible, but it certainly is a long shot.
1. Dispute the Error (If Applicable)
The first way to potentially remove a collection account from your credit reports is to dispute the account with the credit reporting agencies if you disagree with the information as reported. For example, if you paid or settled a collection account yet the balance was never updated to reflect a zero dollar balance you could dispute the inaccuracy and even request for the account to be deleted from your credit reports due to the error. Your dispute may or may not ultimately result in a deletion of the account, but you do at least have the right to request for any perceived errors to be removed from your credit reports under the Fair Credit Reporting Act (FCRA). And on the off chance the collection agency never responds to your dispute the credit bureaus must remove the item as unverifiable.
2. The Pay-For-Delete Long Shot
Another potential strategy for seeing an item removed from your credit reports sooner than the FCRA purge date is to request a pay-for-delete settlement with a collection agency. When negotiating the pay off or settlement of a collection account you can ask the debt collector to agree to remove the account from your credit reports as part of the agreement. You should be aware; however, that securing a pay-for-delete agreement is definitely a long shot. Collection agencies sign agreements with the credit reporting agencies stating that that they will not delete accurate collection accounts from credit reports simply because they have been paid or settled. As a result, most collection agencies will not agree to a pay-for-delete settlement even if you ask. And even if they do agree to the arrangement there’s no guarantee the credit bureaus will honor their request.
3. Wait for the Purge
If all else fails, you will simply have to sit back and wait for a collection account to eventually be purged from your credit reports. However, even if you find yourself stuck in this unenviable predicament you can take a little comfort in the fact that collection accounts impact your scores less and less as time passes. One of the factors the FICO and VantageScore scores consider when calculating the impact of a collection account on your credit scores is how recently the negative activity occurred. As the recency of a collection account fades, the account will impact your scores less and less. If you refrain from having any new negative activity added to your credit reports then you credit scores should begin to naturally recover as time passes.