‘Pay for Delete’ Might Help Your Credit — If You’re Lucky

Paying Off Debt, Personal Finance
Pay for Delete

“Pay for delete” is a strategy that can remove collections accounts from your credit reports — but only if you can get the collector to agree.

You call or send a letter to the debt collector and propose a deal: You’ll pay off the account, and the collector will wipe the account from your credit reports.

These agreements are rare, though. Credit reporting agencies strongly discourage any attempt to remove accurate information from their reports, and debt collectors don’t want to make a habit of erasing information, either.

Pay for delete might be an option if you have smaller collections accounts that you want off your credit reports for a specific reason, such as applying for a mortgage. You’re likelier to succeed if a unique circumstance led to the collection, such as a layoff, a health crisis or a bill that never arrived.

How ‘pay for delete’ can help credit

Collections accounts can linger on your credit reports for up to seven years from the time the debt originally became delinquent, or more than 30 days past due. This blemish can impair your ability to get a mortgage or accomplish other financial goals.

If you pay off an account in collections, it will still appear on your credit reports as a paid collection. Newer versions of the FICO and VantageScore credit-scoring formulas ignore paid collections in their calculations, but older versions — including the ones used in many mortgage approvals — consider a paid collection negatively.

A successful pay for delete, on the other hand, removes the paid collection entirely.

Note that pay for delete won’t remove the negative information reported by the original creditor, such as late payments.

How to try ‘pay for delete’

Successfully removing a collection account from your credit reports using pay for delete takes some research and proactive communication with the collector.

Follow these steps:

  1. Know who owns the debt: Check your credit reports for details about the debt. There you’ll see if the original creditor sold the debt to a collection agency, or if it just outsourced the collection process. You’ll want to negotiate directly with whoever owns the debt; if the original creditor still owns it, it might be able to retract the account from collections.
  2. Line up your explanation: Did you not receive your original bill? Lose a job? Face a medical emergency? Come to the conversation with an explanation of why you didn’t pay the debt and how removing it will help you. This will increase your chances of getting the account deleted.
  3. Write a pay for delete letter: You might want to start out the conversation over the phone, but be sure to get any agreement in writing. This will lay out how much you’re willing to pay in exchange for the deletion of the collection account. Send your letter by certified mail to verify receipt.

What if the collector refuses?

If the collector refuses your request, consider paying the collection account anyway.

An unpaid collection almost always hurts your credit, but a paid collection will hurt less or not at all, depending on the credit score version used by a potential creditor.

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