How You Can Remove A Collection From Your Credit History
A collection on your credit report will significantly negatively impact your overall score. This will be weighed in during your score calculation under your payment history, which is roughly 40% of your overall score.
How Can I Remove These?
First, you need to find out if the agency still owns your debt. If you are being contacted by a debt collector you should ask for debt validation before you do anything else. This needs to be done in writing and through the use of certified mail.
This places the burden of proof on the collection agency. They must show that they legally own your debt and can legally collect on it. Surprisingly, it is rather common for debt collectors to be unable to prove this and if that is your situation then you don’t have to pay and you can get the item off your report.
If however the do verify your debt then you need to come to a settlement agreement. We suggest you start with an offer that is no more than 50% of the debt. Debt collectors purchase your debt accounts for pennies on the dollar, further they can legally add in fees to your balance. The amount an agency will settle for is directly related to how old the debt is, however you should never pay anymore than 50% to any collection agency.
Additionally you must have this stipulation as a part of your agreement that the agency will stop reporting the debt to the bureaus. This was when you dispute the item on your report it will be removed.
Once you have settled your debt or if you are not being contacted by the agency then you can file a credit dispute and have the collection erased from your report. To file a dispute you will write a letter and you must identify the item you are challenging.
When the bureau gets your letter they will investigate. They will contact the collection agency and ask them to verify the account, the dates, and the balance. Next you will get a letter from the bureau that informs you of the results of their investigation. If the item has been deleted from your credit file, verified, or updated with accurate information.
The Fair Credit Reporting Act of 1970 is the law that enables you to dispute your credit report. This law also says that the longest time an item can remain on your report is for a maximum of seven years. However it makes no mention of the minimum amount of time an item must be in your file.
It is legal to dispute any item you feel is questionable on your report. No one has ever faced any legal consequences for credit disputes. It would be in your best interest to file a dispute for every item, it may not be the most ethical but it would benefit your score.
It may not be ethical but who says it’s ethical for you to pay fees and outrageous interest rates for credit. The bottom line is you don’t have to just live with bad credit, you can remove these items and improve your score.
For a free credit consultation call 1-800-483-0256 or to learn more about how to remove collections or how you fight back against a popular collection agency NCO Financial Systems visit us.