How to Fix Collections on a Credit Report

You can fix collection accounts by paying the debt. Collections are credit accounts closed by your creditor because you defaulted on the balance due on a credit card or loan. The creditor closed the account and assigned it to an in-house debt-collection team or sold it to a debt-collection agency. The current status of the account on your credit report is listed as "collection item." The Fair Credit Reporting Act allows it to be listed for seven years, and, as long as the information is correct, only the creditor or debt collector can have the negative entry removed.

Instructions

1

Contact the creditor or debt collector. If you don't have contact information pull a copy of your credit report and get a telephone number from the report. It will be listed with the collection-account entry. A free copy of your report is available from the website Annual Credit Report (see Resources). Nationwide credit bureaus operate the site to offer free credit reports as required by the Fair Credit Reporting Act. View and print your report by visiting the site and clicking on "Request A Report." The site will ask you some questions to verify your identity. Continue following the prompts to see your report, or follow instructions on the home page to order by telephone or mail.

2

Make an offer to pay the debt in full -- if the creditor or debt collector will agree to remove the collection-account entry from your credit report. The process is called "pay for delete," and the creditor or debt collector can legally instruct the credit bureaus to remove the negative information. However, the creditor or debt collector are under no obligation to do so. Generally, pay-for-delete agreements are difficult to come by because of ethical considerations.

3

Offer to settle the account for less than the full amount if pay-for-delete is not an option. Debt settlement is a common practice for resolving old debts, with creditors and debt collectors sometimes settling for half the balance or less. Start low by offering to settle the account for 20 percent of the balance, and be prepared to increase your offer to make a deal. Once you settle, your credit report will be updated to show that the account was "settled for less than the full balance." You will have fixed the account by paying it off, ending further collection activity and the threat of a lawsuit. However, the negative entry will remain on your report for seven years from the date of the settlement.