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Negative items on your credit report, such as accounts in collection, damage your credit score. If you can get the collection agency to agree, a pay for delete is one possible option that might help you get that account removed from your credit reports and move your credit score back in the right direction.
Nevertheless, since credit reporting agencies demand truthful and accurate information from debt collectors who report accounts to them, they dissuade the pay for delete practice. Removing a legitimate collections account runs afoul of that agreement. For this reason, convincing a collection agency to accept a pay for delete request can be challenging. Furthermore, depending on the kind of collection account that shows up on your credit report, this debt settlement strategy may not be as beneficial as it once was.
Pay for delete is a tactic where you work with a debt collector to pay off the debt in exchange for the removal of a negative entry from your credit report. Although pay for delete appears to be an easy way to raise your credit score, its efficacy and legality are frequently called into question.
Is Pay for Delete Legal?
The legality of pay for delete exists in a gray area. While the Fair Credit Reporting Act (FCRA) doesn’t explicitly prohibit it, the practice is discouraged as it involves removing accurate information from your credit report.
However, the FCRA allows for the removal of inaccurate or incomplete information. This means that if you believe the debt collection entry on your credit report is inaccurate, you can dispute it with the credit bureaus and request its removal.
Does Pay for Delete Work?
The effectiveness of pay for delete depends on several factors:
- Debt collector’s willingness: Not all debt collectors are open to pay for delete agreements. Some may refuse to remove the entry even after receiving payment.
- Credit bureau cooperation: Even if the debt collector agrees to remove the entry, the credit bureaus may not comply, especially if the information is accurate.
- Impact on credit score: The impact of pay for delete on your credit score is uncertain. Some credit scoring models, like FICO Score 9 and VantageScore 3.0, ignore paid collections altogether.
Alternatives to Pay for Delete
Instead of resorting to pay for delete, consider these alternatives:
- Dispute errors: If you believe the debt collection entry is inaccurate, dispute it with the credit bureaus.
- Request debt verification: Ask the debt collector to provide details about the debt to ensure its accuracy.
- Wait for the entry to fall off: Collection accounts automatically fall off your credit report after seven years.
Pay for delete is a controversial strategy with uncertain effectiveness. Examine other options first, such as contesting errors or waiting for the entry to fall off naturally, before deciding to do it. Recall that your credit score is an indication of your past financial behavior, and trying to manipulate it with dubious means may have unforeseen consequences.
How does ‘pay for delete’ work?
Negotiating a pay for delete settlement agreement begins with a call or a letter to a collection agency. You propose to pay off a debt (or settle a debt entirely) in your letter or phone conversation, provided that the debt collector also agrees to request that the credit bureau(s) remove the negative entry from your credit report(s).
If the debt collector agrees to your request, it’s important to get the offer in writing. If the collection agency does not delete the account after you pay, having a written offer can help shield you.
You might not be able to get the debt collection agency to comply with your request or have little recourse if the agreement isn’t upheld because the Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from making false or misleading claims.
Why ‘pay for delete’ may not be the best idea
Trying to negotiate a pay for delete arrangement can be frustrating. Credit reporting is optional, so collection agencies are not compelled to report delinquent accounts to the credit bureaus; however, a lot of them do exchange information with Equifax, TransUnion, and Experian.
When a collection agency applies to be a data furnisher with a credit reporting agency, it signs a subscriber agreement detailing what the debt collector is and isn’t allowed to do. In that agreement, a credit bureau would prohibit a collection agency from requesting the deletion of accurate but negative accounts after receiving payment from consumers. This is a common restriction in debt collection agreements.
A collection agency may no longer be able to report future collection accounts to a credit bureau if it is discovered to have broken its agreement with that agency. And the inability to report activity to the credit bureaus could put a collection agency out of business. Therefore, it’s easy to understand why some collection agencies might be opposed to pay for delete agreements.
Is a pay for deletion legal and what is the process?
FAQ
Why is pay for delete bad?
Do pay to delete letters actually work?
Do collection agencies accept pay for delete?
What is the 609 loophole?
Is pay for delete legal?
For that reason, pay for delete isn’t considered totally above board and the credit reporting agencies discourage the practice. Still, pay for delete isn’t expressly prohibited under the Fair Credit Reporting Act, so some debt collectors will offer it as an option. What Is a Pay for Delete Letter?
What is pay for delete?
“Pay for delete” is a practice in which debt collectors erase the collections account off your credit report in exchange for payment of the account. The practice isn’t totally aboveboard. If debt collectors report information to credit reporting agencies, they must provide accurate and complete information, so pay for delete can be a gray area.
Do pay for delete letters have legal weight?
As such, pay for delete letters typically don’t have any legal weight. The debt collector might not follow through. Often, debt collection agencies only care about receiving payment on collections. For that reason, a debt collector may take your payment and then refuse to remove the account from your credit report.
Is ‘pay for delete’ worth it?
‘Pay for delete’ can sometimes remove negative information from your credit report, but it may not be worth it. A bad credit score can work against you in more ways than one. Getting approved for new loans or lines of credit may be difficult, and even if you qualify, you’ll probably end up paying a higher interest rate to borrow.