Collections activity can damage your credit report and lower your credit score. Lenders use information from your credit report when considering your credit worthiness and the amount of interest you will have to pay when you borrow money. If the credit bureau incorrectly lists a collections account on your report, there are steps you can take to have it removed. If the report is accurate, you may be able to have it removed, but it will be up to the reporting agency.
Your Credit Report
The Fair Credit Reporting Act provides consumers with the ability to order one free credit report each year from each of the three main credit-reporting agencies--Experian, Equifax and TransUnion. Ordering your free report allows you to see what information it contains. Since creditors do not always report to all three agencies, you need to order all three reports. The website AnnualCreditReport.com is the only government-authorized avenue for ordering your credit reports.
Inaccurate Information
If the credit bureau shows inaccurate information on a collection account, you can dispute the listing. Send a certified letter to the collection agency informing it of the incorrect information. Typically, the collection agency will not have the original files for the loan -- the lender typically keeps the file and sends the collection agency basic information about the loan or account -- so the agency will not be able to verify incorrect information. If the agency cannot verify the information within 30 days, it must remove the listing from your report. After the bureau removes the information, you have the right to request that it send updated reports to anyone who requested your report within the previous six months.
Old Information
The credit bureaus must remove collections accounts after seven years. If the account listed on your report is older than seven years, you can request the bureau remove the information from your report. If the bureau can confirm that the debt is older than seven years, it will remove the listing from your report.
Paying the Account
If the collection account is not old enough to expire from your report, you can negotiate with the collection agency for its removal. More than anything, a collection agency wants to receive payment for your account. Call the agency and ask to speak with the person in charge of charged-off accounts. Ask the creditor to remove the listing as a condition of payment. If the agency agrees, be sure to ask for a written agreement. Make sure the agreement specifies that the agency will remove the listing from your credit report.
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