Credit Infocenter

How to Remove a Paid Collection from Credit Report

April 2nd, 2013 · No Comments · Collection Agencies, Debt Collection

by Staff

Q. How do I get paid collections off of my credit report?

A. In order to report to a credit bureau, a collection agency must first register with it. Since each of the three bureaus is a for-profit company, a collection agency must register with each one separately. Reporting to each credit bureau also requires paid dues and the information must be submitted in a specific electronic format.

Collection agencies must also set up a way to enter the debt in their computer database and a way to update the status of the debt. At regular intervals, they must transmit the information about their accounts to the credit agencies. These ponderous hurdles are why individuals do not report private debts to credit bureaus.

Why am I telling you all this? Collection agencies go to all the trouble of reporting to a credit bureau as an incentive to get people to pay their debts. It’s just part of their business model.

Once the debt is paid, they often merely update the collection as “paid” in their system. At this point, they really don’t have any reason or motivation to touch the account again in their system. They have their money and the account is “closed”.

It’s the rarer situation that a debt gets deleted from a collection agency database. It takes extra effort – they must pay an employee. Debts are deleted if a) the original creditor recalls the debt due to a) a mistake or b) the original creditor is selling or assigning the debt to another collection agency. In these situations, the motivational basis for deleting an account from the electronic reporting system is often one of legality.

In order to get a collection agency to remove a listing, you must convince them that the account is being reported illegally. Under the Fair Credit Reporting Act, if an information provider (in this case, the collection agency) cannot verify information being reported to a credit bureau, they must delete it.

In many cases, a collector purchases a debt with very little documentation. They may possess enough documentation to validate a debt under the Fair Debt Collection Practices Act (for more about debt validation, read our article here), but not enough to face a legal challenge in court under the Fair Credit Reporting Act. Am I implying that you might have to sue them to remove the account? Yes, I am.

Breathe easier. There are some simpler and less confrontational things to try first.

  1. You didn’t say from what type of account this collection has arisen. If the account was originally from a credit card, make sure both the original creditor’s listing for this account and the collection lists a zero balance if it is reporting on your credit report. If the credit card company is showing the account on your report as having a balance, you should write them immediately, include proof that it was paid and demand that the balance be listed as “zero”. This will help your credit score.
  2. If the account’s original creditor is not listed, for example if the debt was a medical collection, it’s time to dispute the listing with the credit bureaus. It’s your legal right to dispute anything on your credit report. If you dispute and the credit bureau cannot verify the listing or they take longer than 30 days to investigate the listing, they must remove the account from your credit report. You could get lucky and this happens all of the time; it is worth the cost of a stamp to give it a try. For more information on disputing information on your credit report, read our credit repair article.
  3. If original creditor is showing on your credit report (as well as the collection), you should dispute both it and the collection account with the credit bureaus. Again, it is worth the try. If either listing is removed, this will help your score.

For more information on how to remove a collection from your credit report, read our article “Five Ways to Remove Collections From Your Credit Report“.

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