Can You Remove Collection Accounts From Your Credit Report?

What Are Collections Accounts?

If you fall behind on your credit card payments, medical bills, or other bills, the creditor may decide to charge off the past-due debt and send the account to collections. Usually, the original creditor (such as the credit card company) will try for several months to collect on the delinquent account. If the creditor is unsuccessful in getting you to pay the debt after six months or so, they’re likely to either sue you or charge off the debt.

If the debt is charged off, a collection agency can buy it and try to collect the debt. At this point, the account becomes a collections account. 

Medical collections are a little different. Health providers generally don’t report medical debt to the credit bureaus, but they will send overdue medical bills to a medical collections account company. Your credit score should not reflect a recent medical visit, but it will reflect a medical bill that’s been sent to a medical collections company.

How Do You Know a Collections Account Is Valid?

You may or may not receive notice before an account is sent to collections. If you don’t receive such notice but hear from a debt collector, proceed with caution. The debt collector should mail you a debt validation notice within five days of contacting you. This letter should inform you that you have 30 days to dispute the debt with them. If a collection agency fails to send a debt notice with information about your right to dispute, it is violating federal law.

To make sure the collections account is valid, send a debt verification letter. Ask the debt collector for complete information about the debt, including the name of the creditor who held the original account, the amount of debt you owe, and an itemized list of any fees or interest added.

You can also ask:

• Why the debt collector believes you owe the debt

• How old the debt is

• When the last payment was made

• Whether the debt is past the statute of limitations 

How Do Collections Accounts Affect Your Credit Score?

Having a collections account on your credit report will have a negative impact on your credit score and can hurt your chances of getting approved by new lenders in the future. If you are approved for new credit, having a bad credit score may mean you pay a significantly higher interest rate on your credit cards or loans.

When your account is sent to collections, it’s reported to the three major credit bureaus: Equifax, Experian, and TransUnion. Prior to this, the missed payments leading up to collections will also be recorded on your credit history and hurt your credit score. Having an account sent to collections hurts your credit score even further.

How Much Will a Collections Account Affect Your Credit Score?

There’s no single answer to this question. The two biggest consumer credit scoring models are FICO and VantageScore. Each company has its own way of calculating your credit score. 

To make matters more complicated, each company also updates its scoring model occasionally, and different types of lenders may use different scoring models. This is why you may see different numbers when you look up your credit score in different places.

VantageScore’s most recent scoring model, VantageScore 4.0, “Ignores all paid collections and applies a lesser penalty for unpaid medical collections.”^[1] The same is true under FICO Score 9, FICO’s most recent scoring model.

Can You Remove Collections Accounts From Your Credit Report?

Sometimes. There are three possible scenarios here:

1. The collections account information is incorrect or too old to be reported. In this case, you have the right to dispute the account and have it removed. You’ll need to dispute it with any credit reporting agency that’s showing it on your credit report. 

2. The collections account information is correct, but you’ve made steps to remedy the situation. In this case, you can write a goodwill letter or pay for delete letter to ask for the account to be removed. There are no guarantees this will work, but it doesn’t hurt to ask.

3. The collections account information is correct, and you haven’t made steps to remedy the situation. There’s probably no way to get the account information removed, but it should drop off your credit history after seven years.

How Do You Remove Incorrect or Old Collections Account Information From Your Credit Report?

Credit reporting isn’t a perfect system. Inaccuracies are more common than you might think, especially when debt transfers ownership between the original creditor and a debt collector.

If a creditor or collection agency has reported inaccurate information, you can dispute it to have it removed from your credit report. This should not cost you anything! It's important to dispute inaccurate negative information to maintain good credit. You also have the right to dispute old information. After seven years, negative information on your report should age off.

This is why it’s important to check your credit report regularly. You are entitled to a free credit report annually from each of the three major credit reporting agencies. This means you can run a credit report every four months to keep tabs on your account throughout the year.

To remove incorrect or old collections account information from your credit report, follow these steps:

1. Get a free copy of your credit report and review it carefully. Make note of any information that doesn’t match up with your financial records.

2. Write a dispute letter or submit your dispute online with each credit bureau reporting the information. Detail what information is incorrect and request its removal. Include supporting documentation to back up your claim.

3. Look for a response within 30 days of submitting your dispute.

Step 1: Review Your Credit Report

Start by reviewing your credit report. If you see your credit score take a nosedive or learn that a debt has been sent to collections, this is a good time to review your credit history to see what happened. Many people also set a reminder on their calendars to run and review their free credit report every four months.

How To Get a Free Credit Report

Thanks to the Fair Credit Reporting Act (FCRA), the three major credit bureaus (Experian, TransUnion, Equifax) are required to provide a free credit report annually. You can get a free copy of your credit report once a year from each credit bureau. The credit reporting agency Equifax has started offering six copies per year starting in 2020 and running through 2026. Visit the Equifax website to get the additional copies. 

You can request a free credit report from each of the national credit bureaus at annualcreditreport.com or you can call 1-877-322-8228 to get your free copy. The three major credit bureaus may report your credit information differently, so make sure to review each carefully for inconsistencies. Take a good look at your credit card accounts and medical collections accounts to compare the information noted on each report. If you find an account you don’t recognize, you can dispute the account. 

How To Look for Inaccurate Information on Your Credit Report

Examine each entry on your credit report for inaccurate information. Is the debt yours? Has the debt amount and payment history been correctly reported? Your credit report should also list who reported the debt or information. See an unfamiliar name? Look it up online. Most debt collection agencies don’t have “collections” in their name. 

If there’s anything that doesn’t look right to you, highlight it or make note of it and do some research. 

Tip: Gather recent financial documents like bank statements, credit card statements, loan documents, and collections letters. Compare the information on your credit report to the information in your financial documents. Make sure the account numbers, debt amounts, and payments match up! 

If you find incorrect information, you can dispute it with the credit bureaus. If you think you’ve been a victim of identity theft or fraud, you can also report this to the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB).

Step 2: Dispute the Collections Account

You have the right to dispute any information on your credit report with the credit bureau that has provided that report. Under the Fair Debt Collection Practices Act (FDCPA), debt collectors can face penalties for reporting false information, and credit bureaus are required to report truthful, accurate information. Despite these regulations, credit reports often contain errors for a variety of reasons, including miscommunication from creditors and identity theft. 

If you find a collection agency account that doesn’t belong on your credit report, you can dispute it in one of two ways:

• Write a letter to the credit bureau(s) reporting it

• File a dispute online on the credit bureau’s website 

Experian, TransUnion, and Equifax each offers the option to file a dispute online, but if you choose to write a dispute letter, send it via certified mail and attach a return receipt request. The credit bureau must investigate the disputed matter and generally must respond within 30 days. 

What Do You Include in a Dispute Letter?

To be effective, your dispute letter needs to include information about you, your accounts, and the entries you want to dispute. Make a direct request to have incorrect information removed and attach supporting documentation. Make sure to explain what the erroneous information is. 

That’s the short version. To learn more, read our article How Do I Dispute a Negative Item on My Credit Report?

Step 3: Await the Credit Bureau’s Response

When you dispute a debt, the credit bureau has 30 days to confirm that the debt is valid and accurate. If the credit bureau doesn’t respond, it is required to remove the information from the report.

If you haven’t heard a response or you disagree with the bureau’s response, you still have a few options according to the Consumer Financial Protection Bureau: You can add a written statement to your credit file or get legal advice to see if you have a case to sue for FCRA violations. You can also files a case with your state’s attorney general office.

How Do You Use Goodwill or Pay for Delete Letters?

As mentioned, while you have the right to have inaccurate information removed from your credit report, information that is accurate — even if it’s negative — is legally allowed to stay on your credit report until it ages off. This usually happens after seven years.

Though neither is guaranteed to work, you can write a goodwill letter or a pay for delete letter to see if you can convince the creditor (not the credit reporting agency) to remove negative entries from your credit report.

Goodwill Letters vs. Pay for Delete Letters

While these two letters are trying to achieve the same result, they differ in their approach.

In a goodwill letter, you politely ask the creditor to consider removing a negative entry (for example, a late payment or a paid collections account) from your credit report to help you improve your credit. A goodwill deletion is more likely to happen if you’re now in good financial standing with the company. To learn more, read our article Can a Goodwill Letter Help My Credit Score?

A pay for delete letter is a little different. In this case, you may have outstanding unpaid debt or an unpaid collections account. This letter is a bargaining tool. You essentially offer to repay the debt in exchange for having the negative information about the account removed from your report. To learn more about this process, read our article Are Pay for Delete Letters Effective? 

Let’s Summarize…

Debts that are sent to collection will appear on your credit report and impact your credit score. Verify that the debt and information on your credit report are accurate. If there are any inaccuracies, dispute them with the debt collector, the credit reporting agency reporting the inaccurate information, or both. You have the legal right to dispute inaccuracies on your credit report and have them removed. 

If there are negative items on your credit report but the information is accurately reported, you can write a goodwill letter to ask the creditor or collection agency to remove the collections account from your report. This isn’t guaranteed to work, but it won’t hurt to ask.