Removing Collections from Your Credit Report

If a creditor believes you owe them and have not made appropriate payments in the proper time period, they may send your debt to an in-house or third party collections agency. Collections agencies make their money by buying delinquent debts at a fraction of their value and doggedly pursuing the person who purportedly owes the debt in order to get them to make their payments. In order to make the most money, expect a collections agency to be much more aggressive than the original creditor. Knowing that you value your credit score, collections agencies will be quick to report to the credit bureaus so you will pay up before they can do too mach damage to your credit score.

Collections and Your Credit Score

After a collections agency reports a collection account to the credit bureaus, you can expect a good sized drop in your credit score. Exactly how much it will drop depends on a number of other factors in your credit reports, but if you have an excellent credit score around 750, a single collections account could cause your score to drop by over a hundred points which, in today's economy, could make it difficult to get approved for some types of loans.

On top of that, paying off the collections account will not cause your credit score to go back to where it was. Whether or not the collections account is paid or unpaid, the simple fact that a debt in your name was sent to a collection agency in the first place hurts your credit score and can be reported on your credit reports for up to 7 years.

Deleting Collections from Your Credit Reports

Like any other negative item on your credit reports, you have the right to dispute any collection accounts on your credit reports that you feel are unfairly lowering your credit score. Obvious examples of this are collection accounts that are not yours, single accounts that are listed multiple times, or are for accounts where you paid the debt and the account was sent to a collections agency anyway. Less obvious examples include collections where circumstances prevented you from being able to pay the original creditor on time such as an illness, divorce, or job loss. While the payments truly were late, the negative listings are lowering your credit score to the point that it is not an accurate representation of your credit risk. Because these collection accounts are misleading to lenders, you have the option to dispute them.

Of course, disputing a negative item and getting it removed from your credit reports are two different things. Removing a collections listing from your credit reports may be as simple as submitting the form on the credit bureaus website, but if that doesn't work, you'll have to try more time intensive tactics. Along with credit bureau disputes, you may also need to work directly with the creditor reporting the negative item using methodologies ranging from good natured to confrontational.

Because of how difficult removing collections accounts from your credit reports can be, many people choose to enlist the help of a professional credit repair company like Lexington Law. In 2009, Lexington Law helped clients remove over 1 million negative items from their credit report including 485,147 collections. You can learn more about these removal statistics by visiting the Lexington Law website at www.lexingtonlaw.com.