Debt collectors can delete collection accounts from your credit reports. Never let them tell you it can’t be done. It’s simply not true. If they put a collection account on your credit reports, they can take it off. One strategy to delete collection accounts is through a pay for delete agreement.
A pay for delete agreement is when a debt collector agrees to delete collection accounts from your credit reports in exchange for payment of the debt. While the credit bureaus frown upon these types of agreements, collection agencies have it in their power to delete collection accounts.
Reasons for using a Pay for Delete Agreement
First, paid collection accounts on your credit report do nothing to improve credit scores. Second, paid collections continue to hold the same negative weight as unpaid collection accounts.
Once lenders begin to use the latest version of the credit scoring model, FICO 9, people with paid collections will see an improvement in credit scores. FICO 9 makes some significant changes to how credit scores are calculated. Paid collections will be disregarded as long as they are paid in full. Unpaid medical collections won't ding your credit score as much as non-medical collection debts.
But until lenders widely utilize FICO 9, the current (FICO 8) and older versions will continue to make no difference in paid or unpaid collection accounts — both are negative.
A successful pay for delete can help improve credit scores, especially if the collection account is recent. As a collection account gets older, FICO seems to give it less weight in terms of your credit score. The older a collection account, whether paid or unpaid, the less it factors into your credit score.
And, FICO 8, the most widely used credit scoring model, does not take into account unpaid collection accounts that are less than $100.
When to Negotiate a Pay for Delete Agreement
A pay for delete agreement is made between and a creditor or collection agency to pay a debt in full or an agreed upon percentage in exchange for a deletion of the account or trade-line. Before negotiating a deletion you may want to request debt validation with the collection agency to see if they can even prove you owe the debt.
Who Can Do a Pay for Delete Agreement
Pay for delete agreements can be done with original creditors or collection agencies but they are more typical with collection agencies. Debt that has been purchased by collection agencies becomes less valuable the older it gets.
Many collection agencies just want to collect a debt as quickly and as easily possible making a pay for delete agreement much more likely than with an original creditor.
Some collection agencies will tell you it’s illegal to delete collection entries – what they don’t tell you is there are no legal requirements to report a debt to the credit bureaus at all. Keep in mind any furnisher of information to credit reports can remove what they have instructed the credit bureaus to report.
Debt collectors and original creditors may be reluctant to enter a pay for delete agreement due to their agreements with the credit bureaus. But pay for delete agreements violate the FCRA or FDCPA.
What collection agencies cannot delete
While the collection agency has the power to delete collection accounts, they cannot delete any negative information about the account reported by the original creditor, such as late payments. A pay for delete agreement is still worth pursuing with a collection agency and that’s because a negative accounts can have a double whammy.
Settle Collection Agency Debt for Less
There is a possibility you can settle your debts for pennies on the dollar. See How to Settle Debt with Collection Agencies. Some collection agencies will require you pay the full amount in order for them to delete the account.
Junk debt buyers pay pennies on the dollar for the debt — so why not benefit and settle the debt for less. But even if you have to pay the full amount in exchange for a deletion it can be worth it.
All Negotiations Must Be in Writing
All pay for delete agreements and negotiations should be done in writing, preferably mailed via US Certified, Return Receipt. Create a paper trail. Your correspondence serves as proof if you ever need to pursue a lawsuit for resolution of the matter or if the account resurfaces on your credit reports.
Payment should not be sent before you have an agreement signed by the collection agency in your hands. Get a letter on company letterhead that spells out they will remove the debt from all three major credit-reporting agencies.
Multiple Attempts May be Necessary
Pay for deletes are completely optional. Collection agencies are not required to honor your request. It is entirely up to the collection agency. You may have to make multiple requests before you even get a yes or no answer. If it’s really what you desire, don’t give up. Find the name of an executive, manager or CEO of the collection agencies and address your pay for delete request directly to that person.
You may have a much better chance if you can get your pay for delete agreement in front of the eyes of a decision-maker instead of a lower-level account representative. You may even have to make follow-up telephone calls if you do not hear from them. Just remember once you get an agreement it must be formalized in writing. Don’t pay before you get it in writing.
The bottom line in paying off obligations should be to improve credit scores. Lenders use credit scores to make credit decisions, such as the interest rate you get when you apply for a personal loan, car loan, rent an apartment and even to turn on utilities. It’s not a good feeling being denied for credit or unable to make big purchases due to poor credit scores.
Good credit is invaluable and can save you money.
There is too much at stake to simply pay-off a debt and get nothing in return.
Request a pay for delete agreement. Keep in mind you may have to send a few requests before getting the desired response, but don’t give up!