Can a Debt Collector Remove Data From Your Credit Report?

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This post comes from Christine DiGangi at partner site Credit.com.

Common misconception: Paying off a collections account improves your credit score.

Paid or unpaid, having a collections account on your credit report is a negative. It shows you failed to pay a bill on time, so you’re a higher lending risk than someone who doesn’t have a collections account on his or her report.

It doesn’t matter if you pay the bill eventually. As far as credit scores are concerned, the problem lies in the fact that you didn’t pay it when it came due.

If it’s bad for your credit whether or not the account gets paid, what’s the point in paying it? You want to satisfy the debt and put it behind you, and the creditor or debt collector wants to get paid. It sounds like a perfect situation for negotiation, right?

That’s what one of our readers wondered: “Can I tell a creditor that cashing my check constitutes agreeing to delete [the] account from my credit report?”

Unfortunately, that’s probably not going to work. In fact, it could backfire.

Michael Bovee, the creator of the Consumer Recovery Network and a 20-year veteran of the debt and credit industry, said that sort of negotiating might have worked a long time ago, but debt collectors aren’t going to go for it now.

Collectors rely on data from the credit reporting agencies in order to determine which debts are most collectable, and the credit reporting agencies don’t want collectors to delete accurate information from credit reports, Bovee said.

He said he saw it work like this: The consumer says to the collector, “I want you to take this debt off my credit report when I pay it.” To which the collector says, “I can’t do that, but once you pay it, why don’t you dispute the account to the credit bureau, and then we won’t respond.” By the collector not responding to the dispute, the credit bureau would have to remove the trade line.

About 10 to 15 years ago, Bovee saw consumers regularly succeeding with this tactic, and some online forums still cite this “pay-to-delete” tactic as a way to deal with collections accounts.

“Debt collectors today are not doing it because they don’t want to hurt their relationship with the credit reporting agencies,” Bovee said.

Why bother paying?

Getting back to an earlier point: Why pay at all? Well, it depends on what your credit goals are. Say you want to get a mortgage. The lender will pull your credit reports, see a collections account with a balance and factor that into your overall debt-to-income ratio. They may not want to extend you credit if you already owe someone else a lot of money.

And as far as bringing up the “I’ll pay you if you help me” idea with the collector, you may be hurting your chances of a debt settlement.

“You’ve indicated you want something,” Bovee said. “Now they’ve got leverage.” It’s a debt collector’s job to get you to pay, so if it seems like you’d be willing to pay to get the account to go away, maybe you’d be willing to pay more of what’s owed in order to lower your debt-to-income ratio.

Whenever you’re trying to deal with a collections account, the best thing to do is communicate with the other party. Make sure the debt is legitimate, belongs to you and still qualifies for collection before paying anyone.

If you want to track your progress as you work on rebuilding your credit, you can monitor your credit score with the Credit Report Card, a free tool that updates two of your scores every month.

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Comments & discussion

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  • paula

    I monitor my credit report monthly on several different sites. Last week, I received an alert–when I called the debt collector, I was advised it was a medical bill (that I am unaware of) from almost 6 years ago. This seems so unfair not to mention, I have little recourse in getting this removed from my credit report. I have disputed the claim, and also requested a certified copy of the original bill to investigate. Any information you could provide would be greatly appreciated.

    • Alicia Whitehead

      What state do you live in Paula?

      I am from Missouri and the statute of limitations is 5 years. I help client repair this type of stuff. What it sounds like happened is, that it is a GHOST debt or a legitimate debt that was never notified to you that you owed.

      In Missouri the S.O.L. on legally pursuing a debt like a medical bill is 5 years. However it can report for 7 years.

      Was your request to validate the debt accepted?

      I would ask these questions to the collection company:

      Date of Service, Patient, and original creditor (hospital or dr office).

      Ask them to send you validation of this debt with this information.

      If you have insurance, contact your insurance company and request an EOB for this date of service.

      The EOB will show what your responsibility of this date of service was.
      You can also contact the original doctors office and inquire about the bill.

      Let me know if you have any other questions by responding to this message.

      • paula

        Thank you for the information—I live in Arizona. How do I go about finding out the SOL for medical bills in AZ? The debt collector advised they had been sending me bills to my prior address and my current address-NONE have been received, so I requested it certified mail. Unfortunately, even though with the same employer for 7 years, we switched insurance companies just about every year. We will see if I actually receive anything in the mail from them.

        • Alicia Whitehead

          The statute of limitations is 3 years on Open Ended accounts which is what we classify Medical bills under in Missouri. This doesn’t mean that they can’t still try and collect to get you to pay. This also doesn’t mean that it won’t report to the credit report for the 7 years it is allowed to.

          • paula

            Thank you again for the information. Sounds like as far as a consumer goes, there is little recourse and we are pretty much SOL :(

          • Alicia Whitehead

            O no… not so. You can dispute this with the credit bureaus. I do not recommend online dispute however because that is 100% automated and nothing is ever accurately “verified”. I recommend writing a hand written letter. You will receive the dispute results in 30 days from the time you send it in. This is a law by the Fair Credit Reporting Act. Disputing this information that the “creditor” has been unable to prove that this debt belongs to you. Let me know what happens.

        • Alicia Whitehead

          When you speak to them ask these 3 questions:
          WHO ARE YOU? (name of company, associate, address, phone #)
          WHAT DO YOU WANT? (debt information)
          WHAT HAPPENS IF I DO NOT PAY? (there are things that cannot be said by collection companies and if they do will fall under violation of the FDCPA).

  • Alicia Whitehead

    Information that is reporting inaccurately can and legally must be removed from reporting. When accounts are reporting inaccurate information is a violation of the FCRA.