You just got a notification letter in the mail. Or a call on the phone with an unfamiliar alert: “This is an attempt to collect …”
You have a debt that’s been sent to collections.
What’s next? And what does it mean for your credit? Collections accounts generally stay on your credit reports for seven years, so the first thing you’ll want to do is verify that’s it’s a legitimate debt.
Investigate the collection
Gather information on the debt from your records and your credit reports.
Check your records for details on the account in question, including its age and your payment history. If available, you'll want to have a personal banking statement or similar document handy that shows the date of your last payment.
Next, print out your credit reports from all three major credit bureaus — Equifax, Experian and TransUnion — and highlight the differences when looking for errors. Not all lenders report to all three bureaus, so your reports might not be identical.
You can get a free credit report every week from each bureau by using AnnualCreditReport.com. In addition, you can get a free credit report at NerdWallet.
Use your credit reports to verify these details:
- Account number in question.
- Account status (paid, charged off, closed).
- The date the debt went delinquent and was never again brought up to date.
Once you have the details straight, you can decide which approach to take next.
How to get credit reports in Spanish
🤓 Nerdy Tip
You can request your credit report in Spanish directly from each of the three major credit bureaus:· TransUnion: Call 800-916-8800.
· Equifax: Visit the link or call 888-378-4329.
· Experian: Click on the link or call 888-397-3742.
🤓 Consejo Nerdy
Usted puede solicitar una copia de su informe crediticio (gratis y en español) de cada una de las tres principales agencias de crédito:
· TransUnion: Llame al 800-916-8800.
· Equifax: Visite el enlace o llame al 888-378-4329.
· Experian: Haga clic en el enlace o llame al 888-397-3742.
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If the collection is an error, dispute it
You may have a collections account on your credit report that shouldn’t be there. Maybe it’s too old to still be reported, or the collection itself is incorrect. Here's what to do based on where the error originated:
What to do if the credit bureau made an error
Delinquent accounts should fall off your credit report seven years after the date they first became and remained delinquent. But that doesn’t always happen. For debts that linger longer than they should, file a dispute with any credit bureau that still lists the debt.
If a credit bureau has made a mistake on your report — you don’t recognize the account or a paid account shows as unpaid, for example — gather documentation supporting your case. Then, file a dispute by using the credit bureau's online process, by phone or by mail. The bureau has 30 days to investigate.
What to do if the debt collector made an error
If you think the error is on the part of the debt collector, not the credit bureau, ask the collector to validate the debt to make sure it’s yours. A debt validation letter should include information like the amount owed and the creditor that is seeking payment, among other things.
Note that you have 30 days from the date you receive validation information to dispute the validity of the debt. If the collector can’t validate, the collection should come off your reports.
If the collection is accurate, assess your options
If you want to get the collection removed sooner rather than later, there are strategies you can try. Posters on the r/CRedit subreddit, say it could be possible to negotiate with the collection agency — depending on which one it is.
This strategy, called pay for delete, is when you contact the debt collector and agree to settle the debt. In exchange, the collector agrees to remove the account from your credit reports, not just mark the debt as paid.
This can be tricky though, because creditors are required by law to provide accurate information if they report to credit bureaus. But a collector can choose not to report information to the bureaus. If you do try for a pay-for-delete agreement, Reddit posters advise getting it in writing before you pay.
You can also just pay the collection, either in full, or by setting up a payment plan. Then you wait. Collections accounts generally stay on your credit reports for seven years from the point the account first went delinquent, even if the account has been paid in full.
Newer versions of FICO and VantageScore credit scores do ignore paid collections (though some lenders use older models that don’t).
How much the collection account will impact your credit depends on your credit score range. Late payments and collection accounts will have a more significant impact on a credit score in the 700s than one in the 500s.
» Read more in our guide on the pay for delete strategy
» Read more in our guide on the pay for delete strategy
If you already paid the debt: Ask for a goodwill deletion
You can ask the creditor — either the original creditor or a debt collector — for what’s called a “goodwill deletion.”
Write the collector a goodwill letter explaining your circumstances and why you would like the debt removed, such as if you’re about to apply for a mortgage. There’s no guarantee your request will be accepted, but there’s no harm in asking. Having a record of on-time payments since the debt was paid will help your case.
Your credit record will still show the late payments leading up to the collection action, but removing the collection itself takes away a source of score damage.
» Need a hand? Here’s a sample goodwill letter
Monitor the situation
Whether you're disputing an error, or you're trying to get a paid debt removed earlier than the typical seven-year period, there is a 30-day window in which your claim must be addressed. Check your credit reports after 30 days to make sure that the change was made.
