With paid collections playing a big part in what your credit score looks like, perhaps you’re wondering what you should do about them? The good news is that they only stay visible for a limited time. Having said that, you might not have the luxury of time. Therefore, working with credit repair companies can help you find alternative ways to boost your credit report.
What are Collections?
- Overdue debt that has been paid
- Even once paid, it can still stay on your account
First, it’s good to be clear that paid collections are debts that have been paid but that were overdue at the time of payment. These collections could be full or partial payments. Nevertheless, the key message is that even after you pay, the information stays on your report. Therefore, you would still suffer from a bad credit score even after you’ve paid everything off.
Perhaps this seems unfair. Nevertheless, consider lenders who need to make a decision as to how trustworthy you are as a debtor. They need to have assurance that you’ll pay your installments fully and on time. Even if you eventually pay everything off but it’s late, that messes up the lenders’ cash flow. Furthermore, cashflow is a key component of how businesses stay liquid, including lenders because, believe it or not, they also have payments to make.
How Long Do Collections Stay and How does the Process Work?
- 7 years as governed by the Fair Credit Reporting Act (FCRA)
- Some late payments can stay as long as 10 years
- Starts when the delay started
- Only the late payment disappears unless the whole account was paid also
The majority of negative information related to debts will disappear after 7 years. Furthermore, the countdown starts from the due date. There are some more unusual cases though, when it takes 10 years for the bad debt information to disappear.
Nevertheless, it’s important to note that it’s the bad information that disappears and not the debt. Even after all those years, lenders can still sue you. Although you might be let off if the judge decides that too much time has passed. Essentially, creditors need to make sure they get their act in order and either collect or sue before 7 years is over.
Again, it’s worth remembering that it’s only the bad information that disappears and not the account. Of course this is unless you’ve actually paid off the whole debt.
What can you do to help your Credit Report
- Ask for negative information to be removed
- Work with credit repair companies
There are other things you can do to improve your credit report that doesn’t involve waiting for 7 years. For example, you can negotiate with your lenders to remove the negative information. You can do this either through a Goodwill Adjustment or a Pay for Delete letter.
In the former case, you’re appealing to their humanity if you’ve perhaps suffered a recent trauma or loss. On the other hand, a pay for delete letter is a negotiation tactic where you offer to pay off some of your debt in advance. In return, the creditor removes any negative information although they are under no obligation to comply.
Last but not least, working with credit repair companies can take a huge weight off your shoulders. They’ll determine the best strategy for your case and then manage the whole process for you. You won’t have to deal with lawyers, paperwork or creditors anymore.
What do Credit Repair Companies Do?
- Analyze your credit report for anomalies and errors
- Deal with credit issues
- Liaise with credit bureaus and legal officers
- Make sure you choose legitimate credit repair companies
Analyze Credit Report
The first thing that credit repair companies do is to request your credit report from the 3 main bureaus: Equifax, TransUnion, and Experian. You can actually do this by yourself. However, the point is that credit repair companies then know what they’re looking for once they get your credit report. Not everything listed on your report has the same impact on your score so it’s worth focusing on the high-impact items.
Deal with Credit Issues
Once they have your report, credit repair companies can then dispute any anomalies and errors directly with the credit bureaus. They can even sue fraudulent creditors which is something that happens more frequently that any of us would like.
Credit Bureaus and Lawyers
Credit repair companies are experts in law and debt. They know the language to use and they also know what to look out for when dealing with lawyers and the credit bureaus. If all these processes sound overwhelming then working with credit repair companies is the way forward.
Choose Certified Credit Repair Companies
It’s critical that you choose certified credit repair companies as there are sadly, many scammers out there. You can very easily verify the company you’ve chosen through by checking their certification with the Department of Justice.
Another good verification is to look up their rating with the Better Business Bureau. Although don’t be put off if you don’t see their accreditation because they don’t actually need to do this. A good rating is more than good enough.
Final Thoughts on Partnering with Credit Repair Companies
Paid collections stay on your credit report for at least 7 years and 10 years in some cases. Therefore, you might want to consider alternative options to clean up your credit score, including working with credit repair companies. They’ll take a whole load off your mind and some even offer a lifetime guarantee with all your money back should you not see any results. So, what have you got to lose?