How to Remove An Unpaid Collection From Your Credit Report?

Posted on December 4, 2020 in Debt

When working on how to remove collections from your credit report, there are numerous factors to consider. When you are performing a review and looking at the potential negative things impacting your credit, you might see that you have debts in collection. This might make you nervous at first, but there are a few ways how to get an unpaid collection removed from a credit report under the right circumstances. 

What Are Collections and How to Remove Them From a Credit Report

Debts that have gone to collections means that the original creditor sent the debt to a third-party agency to try and retrieve payments from you. There are many different types of debts that can be sent to an agency if they are not paid. This includes mortgages, car loans, and student loans. Collections usually happen if your debt hasn’t been paid 120-180 days after it was due. A common question we see is, “can I get a mortgage with collections?” Be sure to read our guide that will help answer this and more about unpaid collections and debt.

There are a few ways that collections can appear on your credit report. The process starts with an uncollectible bill. This could be a medical bill that you are unaware of or a credit card bill that you neglected to pay that gets sent to a debt collector. 

You are still legally obligated to pay your debts that are in collections. You will probably make future payments to the collector instead of the original lender in this case. 

Sometimes, scammers pretend to be debt collectors and try to get money from you that you don’t actually owe. You should be careful when someone calls you but tries to withhold information about the original debt that you owe. They might also try to scare you into paying them by threatening you with legal action, such as jail time. Be sure to do you research before working on how to get an unpaid collection removed from your credit report.

How To Request A Full Credit Report

The easiest way to figure out if you have an unpaid collection is by looking at your full credit report. Every 12 months you are entitled to a free copy of your report from each of the reporting bureaus. You can either call them or visit their website to see the report. 

You could also get a free report if you were denied insurance or employment because of a credit report. You have to request this report within 60 days of receiving a denial. 

When you receive your credit report, you should examine it thoroughly. This includes the positives and the negatives of the report. You should make sure that all the information is accurate and that nothing looks suspicious. You will be able to look at all the accounts that you have open and the ones that you have closed. 

Make sure the accounts have an accurate payment history listed and have the correct current status on it. You should also look to see if there are any other negative components listed in your report. This could be collections, bankruptcy, or a foreclosure. All of these things can have a lasting impact on your credit score and will stay on your credit report for different amounts of time. 

How Do Collections Affect Credit Reports?

Collections do not look good on credit reports because it means that you missed multiple payments in a row. Not only by a few days but for an extended period of time. The more recent a collection is on your report, the more it will hurt you. 

Collections on your credit report can stay there for up to seven years. Your credit score drops a number of points depending on the seriousness of the debt and several other factors. Before a debt goes to collections you will usually get at least one late payment warning. You will most likely have to pay a late fee if you missed your payment date. Most companies on average give you two late payments warnings before the debt goes into collections. 

If you see a collection remark on your report that seems inaccurate, you should attempt to contact the original creditor and then proceed to dispute it with the bureau if you can’t resolve it directly. Having an unpaid collection removed from a credit report is a key step to improve ones credit score.

Unpaid Collection vs. Charge-Off

A charge-off is when the lender writes off the account as a loss. The account is then closed but it could still be sold to a debt buyer. This happens when the debt collector cannot collect the debt after about nine months. For accounting purposes, the account is written down as a charge-off. The company can continue to try to collect the debt that you owe. 

However, collections and charge-offs both have negative impacts on your credit score. They will get you about the same amount of damage to your credit score. The higher your score is, the bigger hit it will take.

Both of these cause your score to drop because it increases your credit risk. The higher your risk is, the lower your score will be. If you apply to get a loan or a new credit card, they will see this on your report and potentially turn you down because of it. Continue reading to learn how to remove collections from your credit report and other methods for removing collection accounts from your credit report.

How To Dispute Inaccurate Collections and Get Them Removed

If the collections on your credit report seem out of place, you can get it removed with the right steps. This is the easiest way to have the collection removed, but it can only be done if the collection is not supposed to be there. You cannot remove a rightful unpaid collection from your credit report. 

You can file a dispute over the phone, by mail, or on the credit bureau’s website. You will have to give them your personal information and tell them what debt is incorrect on your report. You will also need to provide them with the proof for this dispute. 

The bureau will have 30 days to give you a resolution if the dispute can be proven. After this, they will give you another copy of your credit report with the updated and accurate information. You can also ask the collection agency for clarification about the debt that you owe them. 

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act is a federal law that limits what a collector is allowed to do. They have to send you a written notice within five days of speaking with you. The notice must say how much money you owe and give you the name of the collector. They are also required to provide you with steps to take if the debt is incorrect. 

Debt collectors are also required to contact you at certain times of the day: between 8 am and 9 pm. They also cannot harass or threaten you with violence. 

If you are being represented by an attorney concerning your debt, the collector cannot contact you directly. They will have to contact the attorney representing you instead. However, the debt collector must be able to easily find out the contact information of your attorney.

If you tell a debt collector to stop contacting you, they can still pursue other legal action against you.

Even after you have paid the debt from a collector, it will remain on your credit report for seven years. Legally, the bureaus are allowed to keep the collection on the report for that long. If the collection still appears after seven years, you should dispute this with the credit reporting bureau. 

Unpaid Collection Removed From Credit Report: How To Prevent It

You should try to avoid letting your debts go to collections because of the long-term effect it will have on your credit report. The first step to take is paying your bills on time. Make sure you have a record somewhere of every bill that you owe each month along with the due date. 

You should also communicate with your creditor if you are unable to make one or more payments. If you don’t pay a bill for 30 days, contact your creditor to verbally tell them that you are going to pay for it. Some credit companies are willing to work with you to pay off your debt before they send them to collections. 

How To Remove Collections From Your Credit Report 

Paying a debt that has gone to collections can be a lengthy process. As long as you are patient and don’t freak out, you can get the debt settled. Make sure you know your rights if you have an unpaid collection on your credit report. 

Related: How to remove a charge-off from your credit report without paying

Get Your Unpaid Collection Removed From Your Credit Report

Remember, the only way to remove an unpaid collection from a credit report is waiting for the seven-year period to pass or disputing a false claim, so do everything you can to avoid collections from the get-go.

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