I Paid the Collection Agency, But the Negative is Still On My Credit History!

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A bill goes unpaid, goes to collection and ends up as a dark spot on an otherwise bright credit history. It can happen to anyone, including this viewer who wrote in with the following question:


I have a question I was hoping you’d be able to help with. I have excellent credit… never even carried a balance on a card. I recently asked my main credit card, Discover, for a credit increase. They told me they couldn’t, despite my salary being much higher now than when I opened the card. Then on Monday, I got an email from them saying there was a serious delinquency and collection on my credit report. I checked my credit report online and found a credit card that had been sold to a collection agency. I only got the card for the discount and almost never used it. When I moved in 2006, I changed the address on everything in my wallet, except the accounts I shared with my mother. We both thought we shared that account, therefore I didn’t switch the address over.

Fast forward to 2008, my mother had taken me out shopping as a treat. I told her I wanted to pay for at least one thing, but she didn’t want me to, so had me pay with the shared card. I never got a bill. But I wasn’t expecting to, since I thought it would go to my mother’s address. Well, it turns out that was not a shared account – and they sent bills to my old address. When I called them on Monday (2/15), all they could tell me about the account was that it had been sold to a collection agency. According to my credit report, the account had a high balance of $39, so I owed a very small amount at first.

Tuesday, I finally got a hold of that collection agency. They pressured me into paying $120 over the phone, without getting anything in writing first, and told me they could not take the collection agency off my credit report. They said they’d tried to contact me exactly one time – sent a letter to the obviously outdated address. They told me they would have tried harder to reach me if the amount had been higher. I did a little research online, and learned that having a collection agency on your credit report is one of the worst things that can happen, and it will stay on there for 7 years. What I found also said I should not have paid until I got notice in writing from the collection agency, but I’ve already given them my bank information to make the payment.

I’m basically wondering what I can do to restore my once-stellar credit. It was an honest mistake. Looking at the rest of my credit history, it’s spotless. I’m really concerned because I’m getting to the age where I might want to buy a house or car within the next 7 years, and I don’t want to have to pay a higher interest rate because of a $39 balance on this card. What would you suggest? What are my legal rights here?

Thank you so much for your help!


Hi Katie,

Sorry about the issues you’re having!

Unfortunately, at this point there’s not much you can do. The advice you found online was correct: you should have used the money owed as leverage to have this negative item removed from your credit history before agreeing to pay it back. That wont help now, but is definitely something to keep in mind for the future.

About the only thing you can do at this point (other than wait the years required for this negative item to be dropped from your credit history) is have an explanation added to that item in your credit report. This will not erase the damage, but could help, especially since the rest of your credit history is spotless. Here’s the pertinent blurb from the FTC website that allows you to do this:

“You have a right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.”

Btw, the fee the FTC is referring to (I assume) is for the agency to send copies. There shouldn’t be a charge for adding an explanation.

What should you put in the explanation? Well, it should be short (no more than a 100 words) and to the point. To see some sample statements with letters to credit bureaus requesting they be added, check out this article from creditcards.com.

Unfortunately, this explanation probably won’t do anything to raise your credit score for a simple reason: credit scores are computed quantitatively, i.e. from numbers. The computer sifting through your data at the speed of light won’t slow down to read and consider your explanation, even if it could. However, a future employer or creditor (like a mortgage lender) might. So a properly worded explanation is better than nothing.

But let’s end on a positive note! The rest of your credit history is flawless and the amount in question here is small. The damage to your credit history and score shouldn’t be so severe as to ruin your chances of becoming a homeowner.

And for everyone else reading this, remember, you should never be persuaded to pay past due accounts without including as part of the deal an agreement with the creditor or collection agency to remove any negatives from your credit history! And if you don’t get that agreement in writing and signed by a person in authority, it didn’t happen!

Creditors, and particularly collection agencies, have proven time and again that their word is meaningless. They will say or do anything to get what they want, including telling you bald-faced lies. They will tell you they don’t have the ability or authority to remove negative items. They will tell you it isn’t legal to do so. B.S. Keep in mind, however, that the only company that can remove a negative from your credit history is the company that put it there. In other words, if the credit card company put a late payment or other negative on your credit history, the collection agency can’t remove it because they didn’t put it there. The credit card company will have to remove it.

Learn more about cleaning up your credit history at this page of the FTC website.

Learn about your rights when dealing with debt collectors at this page of the FTC website.

Learn more about getting out of debt and managing your credit history in my latest book, Life or Debt 2010.

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