Credit Restoration: Pay for Delete

Pay For Delete: Should You Do It?

Pay For Delete: Should You Do It?

Pay for delete services are something many credit users do not understand. The following is information on what pay for delete is, whether it’s for you (spoiler: it’s probably not), and how you can implement in your own life.

What happens when a collection agency receives my debt?

The collection agency generally passes along this information to the credit bureaus to notify them of the collection. This process will typically add a negative event to your credit report, which can lower your credit score. Your credit score will suffer even more if you don’t pay off the debt.

This information can stay on your credit report for up to seven years, but as time goes on, the negative information factors in less to your credit score.

What is Pay for Delete?

Pay for delete is when you offer to pay owed debt in exchange for the creditor removing the negative account history from your credit report. However, there are risks associated with it, and trying to do so is asking the debt collector to violate their contracts.

How common is pay-for-delete?

Roughly 10% of collection agencies will agree to pay for delete because they want to collect. You’ll probably have better luck with smaller, mom-and-pop collection agencies. Legitimate debt collection agencies will probably not engage in the pay for delete process.

What are the risks of pay for delete?

The risk lies with debt collectors. Therefore, there’s a big chance they will not do the pay for delete. The collectors that remove this information are actually not supposed to, according to their contracts with the three credit bureaus. They are required by law and by contract to send accurate information, so technically, pay for delete is not advisable.

How does pay for delete affect my credit report?

Collection agencies could delete the account associated with the collection. But it can’t delete anything from the creditor originally, including late payment information.

  • Fully paid collection accounts will show as “paid collection”
  • Fully paid collection accounts will no longer show a balance due
  • It will stay on the credit report for seven years from the original delinquency date

Scenarios where you can pay for delete

You never received a notification of debt

If you never received a bill, you have a chance at using pay for delete. For example, if the bill was sent to the wrong address, you have grounds for an argument that the collection shouldn’t be on your credit report. Just make sure you pay off any other debts before doing so.

The collection is from medical debt

The new FICO scoring model called FICO 9 has lower weighting for medical collections. It also doesn’t take into account paid medical collections.

  • By law, medical debt doesn’t factor into your credit score as much as other types of debt. The idea is that medical collections don’t give as much information about a consumer’s credit risk.
  • However, the new credit score models aren’t widely used yet
  • Nonetheless, it’s now more probable that medical debts will be deleted from your credit report after they are paid off. Be sure to ask your debt collector if you’re dealing with medical debt.

You’re not dealing with a large creditor or bank

If the creditor that you originally owe money to is not a large creditor, pay for delete may work with a wide variety of bills (dental, phone, utilities, medical, rent).

  • If there’s a credit card bill you never paid for, there’s a very low chance that you’ll be able to pay for delete for it. It’s near impossible to negotiate that with a very established credit card company.
  • You may have better luck if you are dealing with a smaller creditor, and working with a different type of debt

Practical Pay for Delete Rules of Thumb

Ask the original creditor

  • Communicate with the creditor to ask if your debt has been sent to a collection on contingency. What this means is that an agency is able to get a percentage of funds that it collects, even though the original creditor still technically has the debt.
  • Ask if it’s possible to just pay off the original creditor’s debt directly, without the collection agency
  • The collection will no longer be in your credit report if the debt is no longer in collections

Contact the agency

Communicate with the collection agency:

  • State to the agency that you intend to pay off the debt
  • Afterwards, request to have your credit report cleared by having the collection removed
  • It can help to be polite in your communications and try to work with them as best as possible

Have ample proof

Having ample proof and a good trail of evidence in your communications is particularly important if there’s a special circumstance surrounding your removed collection. Ensure that you can back up your statements to the debt collector with ample proof

Get it in writing

This is related to having ample proof. You’ll have a strong case if communication is in writing via mail as opposed to hearsay memory over the phone.

  • In case the collection agency agrees with you to delete the collection in exchange for a payment on your end, make sure you ask them for a letter that states this agreement before giving them any money. Don’t pay for anything until you both have agreed to the terms, and it’s in writing.
  • In case the debt collector doesn’t want to mail a letter, email generally also works as evidence

Some Final Things to Remember and Know

  • Paid and closed positive accounts will be on your account for 10 years
  • Open accounts that are in good standing will stay on your account indefinitely
  • Collections can legally stay on your credit report for up to seven years from when the account became delinquent
  • Paid collection accounts will not be removed from your credit report
  • If there is a negative account that’s on your credit reports from all three bureaus, removing it from just one bureau may not actually lead to much effect. And it won’t necessarily change the report from the other two, either
  • Because of this, you should verify if the information will get sent to all three bureaus or just a subset

Pay anyway

Even if you’re not able to get an agreement for pay for delete, it’s good to just pay off the debt anyway. It’s going to be better for your credit report and credit score to have the collection as paid as opposed to not. More recent credit score models for the FICO and VantageScore don’t count any types of paid collections. After paying, you should soon see an updated credit report that shows that you’ve paid.

how to dispute credit report

How to Dispute Your Credit Report

How to Dispute Your Credit Report

Learning how to dispute your credit report can be a confusing and complicated thing to do. The following are some practical steps for you to take to navigate your way through a financial check-up.

Why Should You Check Your Credit Report

It’s quite common for errors to appear in your credit report, which is why it’s also common to dispute your credit report. These errors may not be insignificant. They may be important ones that can have a powerful impact on your future. The fact of the matter is that you could be missing out on a lot when you’re not looking at your credit report. Check out some important statistics and facts below:

  • 35% of Americans have never checked their credit report
  • A 2012 Federal Trade Commission (FTC) report found one in four Americans found at least one potentially important error in at least one of their credit reports
  • Errors on your credit report may affect if you can take out a loan
  • They may affect how much you will have to pay money to get that loan
  • Ensure the information on your credit report is correct, complete, and updated before applying for a loan for a large purchase e.g. home mortgage, car loan, buy insurance, or applying for a job
  • To prevent identity theft

Now is the time to act. Plan now for your future, especially if you’re thinking about doing any of the following things above. You never know what’s going to happen. And you may not know what you’re going to want.

How To Spot An Error

An error is information on your credit report that shouldn’t be there. This might be due to the fact that the information is not yours, is wrongly reported, or it’s against the law to be listed. Common credit report errors include errors in personal information, accounts, and/or derogatory marks.

Personal Information Errors

  • Wrong name listed
  • Addresses you’ve never lived at or used as a mailing address
  • Inaccurate employer information

Account-Related Errors

  • A late payment that’s more than seven years old
  • Having a credit card or loan account listed that’s not yours (or that you’re not a co-signer or an authorized user on)
  • An account that was closed by you, but shows as being closed by the provider

Derogatory Mark Errors

  • A paid-off collections account that still shows as being unpaid
  • A paid tax liens that is more than seven years past the date of payment
  • An account that was discharged in bankruptcy is still showing up as active with a balance (account history can still be reported)

How to Obtain Your Free Credit Report

The Fair Credit Reporting Act (FCRA) requires the three nationwide companies to provide you a free credit report. Equifax, TransUnion, and Experian must, upon request from you, give you a free report once every 12 months. They must provide a website, telephone number (toll-free), and mailing address. You can use any of these 3 methods to obtain your free credit report.

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

You don’t need to request your free credit report from the three nationwide credit reporting companies separately. In fact, you ask to get the credit report from the 3 credit reporting companies simultaneously.

Other Reasons for Getting a Free Credit Report

There are other situations where you’re entitled to a free report. You can get a free credit report if a company takes negative action against you by denying your application for insurance, employment, or for credit.

You can also get a free credit report for the following other reasons:

  • You’re unemployed and are planning to look for a job within the next 60 days
  • You’re on welfare
  • Your credit report is inaccurate due to fraud (e.g. identity theft)

Buying Your Credit Report

If you need a credit report for not any of the reasons above, it might cost you to buy another copy of your report within 12-month period. Contact the three credit reporting companies to a purchase your credit report:

Fixing Credit Report Errors

You want to get into touch with both the credit bureau and the organization that gave the information to the bureau. Under the FCRA, both of these parties are responsible for ensuring that there isn’t wrong or missing information in your credit report.

Credit Bureau

Unless the credit bureau thinks your dispute is frivolous, they must look into the item(s) in question typically within 30 days. Include copies of the documents that will help your case. The letter should include the following:

  • Your full name
  • Your up-to-date address
  • Clearly show each item you are disputing in the credit report
  • List all of the facts along with an explanation for why it supports your dispute
  • Request a deletion or correction
  • Include a copy of your report
  • Circle items you’re disputing
  • Use a sample letter such as this one

You should keep copies of your disputed letter and enclosures. Use certified mail to send your letter, along with a return receipt requested. This way you can keep a record that the credit bureau received your correspondence.

Appropriate creditor or information provider

You also want to write to the appropriate creditor or information provider. Explain that you are disputing the information provided to the bureau.

  • Include copies of documents that support your position
  • Request that the provider copy you on correspondence they send to the bureau

This process may take between 30 and 90 days. Remember that if the provider again reports the same information to a bureau, it must include a notice of your dispute.

Conclusion

Sometimes, disputing incorrect information on your credit report may be one of the fastest ways in making a positive impact on your credit score. At the end of the day, it’s really important to dispute wrong information on your credit report because it may have a huge effect on your financial future. Therefore, learning how to dispute your credit report is important to know.

Credit report with credit score

How to Get Your Free Credit Report And Credit Score

How to Get Your Free Credit Report And Credit Score

Your credit score can affect your financial life in many ways. It can change the rate you get on a mortgage, the likelihood of credit card approvals and even the application for your dream job. In addition, reviewing credit reports and credit scores may help you detect signs of identity theft on time.

People sometimes get confused and think that credit reports and credit scores are the same thing. Here is what you need to know about both of these terms:

A credit score is the numerical value calculated from information in your credit file. In other words, it is a “grade” of your creditworthiness. This score changes over time so it can accurately reflect your current financial behavior.

On the other hand, a credit report is a brief picture of your financial reliability: mainly your history of paying debts and other bills. In addition, they include information like number and types of accounts you have, collection actions outstanding debt, your accounts age, among others. It is worth noticing that your credit score is calculated from the information of your credit report.

It is useful for you to have access to both reports. Let’s start first with how to get your free credit report.

How To Obtain Your Free Credit Report

According to federal law, you have the right to ask for a free credit report every 12 months from each of the three nationwide credit report companies: Equifax, Experian and TransUnion. Following these easy steps you will get your report online very quickly:

  • Go to annualcreditreport.com.
  • On the home page, click on the red button “Request your free credit reports”
  • Complete the 3 steps highlighted in the page:
  1. Fill out the form (one for each of the 3 reports you would like to get)
  2. Pick the report you would like. Remember you can choose a report from one, two or even the three credit report companies.
  3. Request and review your reports: To do so, you will need to answer some more questions. They are supposed to be hard and you may even require your records to answer them. After getting your reports, it’s advisable to print them so you can check at them later.

If you don’t feel comfortable with the online request, there is always the old-fashioned way: just call 1-877-322-8228. You will need to provide some basic information about yourself such as your name, address, social security number, and date of birth (in order to verify your identity).

After reviewing your reports, if you see something strange and would like to dispute information, place a fraud alert or if you have a specific question, contact directly the credit agencies via online or by phone:

How To Obtain Your Free Credit Score

Before showing you the ways of obtaining your free credit score, you should remember the pre-conditions you must meet in order to have a FICO credit score (the most used credit scoring system):

  • Have at least one account opened for 6 months or longer
  • Your account has been reported to the credit bureaus within the past 6 months
  • Have no indication of being deceased on a credit report

If you have ticked all the previous “boxes” and are in compliance with all the prerequisites, you can start searching for your credit scores.

Below you can find some free and reliable sources to get your scores:

MyFico

MyFico is the consumer division of FICO, the creators of the score methodology 25 years ago. Although it does not provide your actual credit score for free (it charges $30 per month for the full service), there is a Fico Score estimator on its website. It could be useful to get an easy and quick estimation of your score. All you have to do is answer around 12 multiple choice questions related to your credit history such as:

  • How many cards do you have?
  • How long ago did you get your first loan?
  • In the last 10 years, have you ever experienced bankruptcy, tax lien, foreclosure, repossession or an account in collections?

If you are clear about your credit history, you will be able to answer all of the questions and get your estimated score in less than five minutes. Remember: this is not your actual score, but if you responded the questions accurately then it will provide a decent estimation.

Freecreditscore

As it is part of Experia and it provides both a free credit report and score from this agency only. In addition, it provides 7 days a week support and no credit card information is required. You will only need to provide your personal information. Freecreditscore is definitely an excellent choice if you only want or need the Experia information.

GofreeCredit

There is a 7-day trial option that will provide you with your TransUnion credit score for free. After that, you will be charged $20 per month. You can cancel your membership whenever in those 7 days without any charge.

Freescoreonline

Freescoreonline offers a 7-day free trial membership that gives access to the three bureaus credit scores. After that, you will be charged $40 per month. Again, you can cancel your membership whenever in those 7 days without any charge.

Ask your credit card provider

An increasing number of people are now finding FICO scores on their monthly credit card statements (around 50 million now according to the Consumer Financial Protection Bureau). The Federal government has been encouraging card issuers to offer this service, and there is a new program that allows them to make it at no cost. Most of the biggest banks (Discover, Barclays, Chase, among others) are now providing this service for free and it is expected that most of the major banks will start doing it soon.

Tips

  • There are many ways to get your free credit report and free credit score. We recommend understanding first which source is best suited for you before start requesting the actual scores.
  • Sometimes a combination of two or three websites could be the way to go.
  • It is a good practice to look both at your credit reports and scores for consistency and complete information.
  • If you choose a “free trial membership” then you may want to create a reminder to cancel it before the paid-membership period starts.
  • If you want assistance in increasing your credit score, view the best credit repair companies. It’s important to choose a reputable credit repair company.
poor-credit-score

Actions That Lower Your Credit Score

Actions That Lower Your Credit Score

Maintaining a healthy credit score is important for your financial safety. You probably already know that late or missed payments on your credit card bills and loans can lower it, but there are other subtle yet still dangerous things you could be doing that may be jeopardizing your credit score as well. Here’s a list of the biggest ones, so that you can avoid these surprising actions that lower your credit score.

Opening too many new credit cards or loans

Credit history is important. Lenders like being able to trace your credit history back for many years because it gives them more information in order to construct a more accurate creditworthiness profile for you. Having good credit for an extended period of time is an obvious benefit. If you’re closing old credit cards and opening new ones, you’re likely hurting your credit score because it limits how much information lenders can access about you.

Using only one type of credit

Part of your credit score is based on the types of credit that you use. If you use multiple types of credit, from mortgages to credit cards and beyond, this indicates to a lender that you’re an experienced borrower and can responsibly handle loans.

Not using your credit

This might seem counterintuitive, but neglecting to use your credit can actually hurt your credit score. A good credit score comes from using your existing credit intelligently, not from abstaining from using it. You should regularly use your credit, such as by using your credit card for daily expenses. Make sure to pay off all of those balances though!

Using too much credit

This tip might seem obvious, but sometimes even if your balances don’t exceed your available credit, your credit score might be in jeopardy. If your balances get too close to your available credit (for example, if you have a $4000 balance but a $5000 credit card limit), this tells lenders that you’re cutting it a bit close and might lower your credit score. Keep your credit expenditures somewhere in the middle, and make sure you pay off your balance every month (or at least most of it).

Having wrong information on your credit report

While rare, errors can still pop up on your credit reports. Errors that can hurt your credit score include reports of late payments or unpaid loans that you never made. Even more common errors, like an incorrect address, can be annoying to deal with. It’s important to pull a report once a quarter and make sure all of your information is correct. You should also monitor your credit score to see if anything unusual happens. Most major credit card providers will give you your score if you ask.

Want more information?

Above were some surprising actions that lower your credit score. If you want more, check out these tips for What NOT To Do To Increase Your Credit Score.

not-to-do

What NOT To Do To Increase Your Credit Score

What NOT to Do To Increase Your Credit Score

A bad credit record can cause multiple problems. With a low credit rating, you diminish your chances of being approved for new credit or loans. If you are approved, you are liable to face extremely high interest rates.

A bad credit history can also prevent you from being approved for a cell phone contract or from renting an apartment; there are also some jobs that require you to have a good credit record. The good news is that you can improve your credit rating, but it is going to be a slow and tedious process. There is a strategy to credit repair, and if you take incorrect actions, you can actually lower your credit score. Here are some tips on what NOT to do when trying to repair your credit history.

1. Apply for Multiple Accounts

Despite the fact that new credit plays an important role in keeping your account active, applying for too many accounts, particularly in a short time span, can affect you negatively. Every credit application made places a hard inquiry on your file, and having multiple hard inquiries can lower your score from this risky behavior.

2. Co-sign a Loan

Unless this is your son or daughter, or other close family member, and you are okay with potentially ruining your credit score for their benefit, do not become a co-signer. Even if you are confident that the individual will be able to make payments on a loan agreement, it is best to refrain from becoming a co-signer. When you vouch for someone else’s loan, the following occurs:

  • Their account is placed on your credit file.
  • In certain instances, it increases your credit utilization ratio.
  • If the individual is unable to pay, you will have to take responsibility for the debt.
  • If no payment is made, your credit will suffer.

Improving your credit is and should be an individual process; you can reduce the risk of further damaging your account by simply saying “NO.”

The bottom line is this. Repairing your credit can prove very challenging; the amount of time that it takes for you to recover is dependent upon the severity of the damage. However, you shouldn’t allow your current situation to have a negative effect on your long term future. Ensure your financial security by taking a proactive position.

3. Maximize your Credit Limit

When you max out your credit, your credit utilization ratio is affected. In fact, you don’t want your credit utilization ratio to be anywhere near 100%. If your ratio is high, it implies that you are a risk, and this will have a negative effect on your credit score.

To be safe, you should aim for a 25% or lower ratio. For example if your credit card limit is $5,000, make sure that you keep a balance of $1,250 or less.

4. Close your Old Accounts

Age is a virtue in the credit scoring world. While you may think that it makes sense to close any accounts that you are not using, this can actually damage your credit score as it will increase your credit utilization ratio.

For example, you might have two credit card accounts and both of them have a $10,000 limit. You don’t use one of the cards and it has a zero balance. The other card has a balance of $3,200. Since you don’t use the card with the zero balance, you choose to close the account meaning that you lose $10,000 in available credit which will raise your utilization score from 16% to 32%. This spike in your credit utilization will lead to a lower credit score. Keep your accounts current and active to assist in improving your credit score.

5. Spend without a Budget

Credit repair begins with budgeting! By creating a budget you are able to identify:

  • Saving and spending habits
  • Your overall progress
  • Areas that need to be improved

The above three points can hurt or help your credit depending on how they are monitored. In order to create an effective budget, you will need to keep track of your monthly expenses. Check out our guide on how to budget effectively.

6. Ignore your Credit Report

A study conducted by the Federal Trade Commission discovered that one out of five consumers had at least one inaccuracy on their credit reports. Even the smallest mistake can have a negative effect on your credit score.

People who know their FICO scores are at an advantage when it comes to obtaining the best credit terms for them. Rather than searching for ways on how to fix your credit report, take an active role and review your credit score on a regular basis.

7. Miss Payments

When you are trying to rebuild your credit, missing a payment is going to have a negative effect on your credit score, and when you are in the rebuilding stage you can’t afford to have such blemishes on your record.

If you can’t afford to pay off the full balance, make sure that you at least make the minimum payment. If you are unable to make a payment at all, call your creditor to make alternative arrangements. Your credit card company would prefer to make an affordable payment plan with you than mark your debt as uncollectable.

Try and Find a Quick Credit Repair Fix

Debt is like being overweight: you didn’t gain it over a short period of time and you won’t lose it over a short period of time. There are several companies offering a quick fix. Don’t fall for it! Ask yourself this simple question: “What can they do to improve your credit rating that you can’t do for yourself?”

On the other hand, if you do hire a credit repair company to assist you and they fail to deliver what they have promised, you can sue them. Legally, such companies are not permitted to charge you any fees until they have been successful in their claims. If you have made an advance payment and been cheated out of your money, you are permitted to sue them in federal court. You can either take this action alone or join with others to form a class action lawsuit. However, it’s best to prevent it from ever getting to that state. View our top reviewed credit repair companies here.

Final thoughts

While it is essential to avoid the above information when rebuilding your credit, the worst thing that you can do is to leave your credit as it is. Rebuilding your credit history is not an easy assignment, but don’t give up. Stick to your goal, be disciplined and allow positive momentum to assist you on your quest towards excellent credit.