Can I Get a Collection Account Off of My Credit Report?
Getting financing and getting the most-favorable interest rate on a loan require a good credit history. However, having a collections account on your credit report hurts your credit and can stop any financing deals. If a creditor has already reported the collection account on your credit report, you might be able to negotiate an early removal. Understand, however, that collectors and creditors are under no obligation to delete this information.
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What is a Collections Account?
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Having a collections account on your credit report indicates that one of your creditors forwarded your account information to a collection agency or collection's department. Accounts reach collections after several months of non-payment -- typically six months. Creditors make various collection attempts, but when a debtor doesn't return phone calls or respond to bill statements, creditors typically charge-off the debt and then sell delinquent accounts to third-party companies, who then restart collection attempts to recover funds.
Credit Damage
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A collections on your credit report creates issues when applying for auto loans and mortgage loans. When lenders evaluate credit reports, they don't want to see charge-off accounts or collection accounts. This information doesn't present you in a favorable manner, and lenders presume that you have a history of not repaying your financial obligations. Credit rejections can occur with collection accounts, and collection accounts remain on reports for seven years.
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Paying a Collector
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Paying a collection account is key to stopping phone calls, letters and avoiding a lawsuit. Understand however that paying a collection agency does not remove a collections account from your credit file. Once a collection account hits your credit report, it remains on your record until it's time for the bureaus to delete the information. Despite a lasting mark on your history, it pays to pay off a collection account. After payment of this debt, the collection agency handling the account will notify the bureaus of your payment. The status of your collection account will go from "unpaid' to "paid."
Removing a Collection
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While debt collectors and collection agencies don't routinely remove collection accounts from credit reports, there's no harm is asking for a removal upon payment of your account. This is something that you need to negotiate before paying off your collections account. For example, call the agency to notify the company of your forthcoming payment. Some debtors attempt to settle a collections account and pay less than the balance owed. However, agree to pay the full balance owed in return for deletion of the account from your report. The collector may reject your request, but if the company agrees, get this consent in writing. Make your payment after your obtain confirmation.
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