March 25th, 2016 | Collection Account Guidance
by Robert T. Lord - Mortgage Loan Officer at 1 STOP Mortgage
NMLS Lic. 216638
One of the quickest ways of raising a credit score is getting collection accounts removed from a credit report. A collection account will stay on one's credit report for seven years no matter if it is paid or not. In other words, the damage was been done to the credit score.
However, there is the magic wand named a Deletion Letter that removes the unpaid collection account on the credit report(s).
Here is how it works. After the debt has been declared valid the debtor contacts the original creditor or the collection agency to agree to a Pay for Deletion Agreement.
A Pay for Deletion Agreement Letter is sent to the creditor stating the debtor will pay X amount of dollars in exchange to delete ALL INFORMATION concerning the account; make it disappear. The agreement includes the creditor to report to the credit reporting agency/agencies to delete all the negative account information.
If the creditor agrees to the terms, the debtor requires a company letter stating the agreement made, before any money is sent. Do not send the agreed amount until the letter is received by the debtor. Always get the Pay for Deletion Agreement in writing (on letterhead) so the debtor has proof that the creditor agreed to delete the negative account completely from your report. If they fail or refuse to remove the negative item from your credit report after the debt has been satisfied, the debtor provides the letter to the credit reporting agencies to have it removed.