Yes, it can work, but be warned that the overall success rate of such letters is generally low. Additionally, the latest credit scoring models (FICO 9, VantageScore 3.0) ignore collection accounts that have been paid, making a pay for delete letter unnecessary if you pay off your debt.
Pay for delete is when debt collectors remove collections accounts from your report in exchange for payment. It's not advised. Many or all of the products featured here are from our partners who compensate us.
Contrary to what many consumers think, paying off an account that's gone to collections will not improve your credit score. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law's editorial disclosure for more information.
Yes, it is possible to have a credit score of at least 700 with a collections remark on your credit report, however it is not a common situation. It depends on several contributing factors such as: differences in the scoring models being used.
How much your credit score will increase after a collection is deleted from your credit report varies depending on how old the collection is, the scoring model used, and the overall state of your credit. Depending on these factors, your score could increase by 100+ points or much less.
After seven years, most collections accounts should fall off your credit report—so if you're closing in on seven years, just hang on. The impact on your credit score is probably already lessened. After the collection account disappears, your credit score might improve.
Generally speaking, having a debt listed as paid in full on your credit reports sends a more positive signal to lenders than having one or more debts listed as settled. Payment history accounts for 35% of your FICO credit score, so the fewer negative marks you have—such as late payments or settled debts—the better.
What is pay for delete? Pay for delete refers to the process of getting a debt collector to remove collection account removed from your credit report. It's a point you can use during a debt settlement negotiation, as you settle a debt for less than you owe. You agree to pay a certain amount of money in your settlement.
Make a Pay-For-Delete Agreement
If you are unable to make a goodwill agreement with Capital One, you will need to work out a pay-for-delete agreement with them. This method will also work if Capital One has handed off the debt to a collection agency.
Whether your attempts to pay for delete are successful can depend on whether you're dealing with the original creditor or a debt collection agency. “As to the debt collector, you can ask them to pay for delete,” says McClelland. “This is completely legal under the FCRA.
Making a payment on the debt will likely reset the statute of limitations — which is disastrous. If the collection agency can't show ownership of the debt. Frequently, the sale of a debt from a creditor to a collector is sloppy. A collection agency hounding you may not be able to show they actually own your debt.
Working with the original creditor, rather than dealing with debt collectors, can be beneficial. Often, the original creditor will offer a more reasonable payment option, reduce the balance on your original loan or even stop interest from accruing on the loan balance altogether.
While it's not guaranteed to work, writing a goodwill letter to your creditors could result in negative marks being removed from your credit reports.
The main ways to erase items in your credit history are filing a credit dispute, requesting a goodwill adjustment, negotiating pay for delete, or hiring a credit repair company. You can also stop using credit and wait for your credit history to be wiped clean automatically, which will usually happen after 7–10 years.
When you're negotiating with a creditor, try to settle your debt for 50% or less, which is a realistic goal based on creditors' history with debt settlement. If you owe $3,000, shoot for a settlement of up to $1,500.
Offer a Lump-Sum Settlement
If you decide to offer a lump sum to pay off the debt for less than you owe, understand that no general rule applies to all collection agencies. Some want 75%–80% of what you owe. Others will take 50%, while others might settle for one-third or less.
If you do have a legitimate issue with a debt collection that shows up on your credit report, you can dispute it through the collector or the credit bureaus. To contact the collector directly, be sure you file a letter in writing within 30 days of first receiving communication about the debt.
If you have a collection account that's less than seven years old, you should still pay it off if it's within the statute of limitations. First, a creditor can bring legal action against you, including garnishing your salary or your bank account, at least until the statute of limitations expires.
You can ask the current creditor — either the original creditor or a debt collector — for what's called a “goodwill deletion.” Write the collector a letter explaining your circumstances and why you would like the debt removed, such as if you're about to apply for a mortgage.
The worst thing that can happen when ignoring the debt collector is that the original creditor or the collector may sue you. If you do not have a good defense, they will get a judgment against you. After getting the judgment, they may record it and thereby create a lien that attaches to your property.
Once I receive this, I will pay <$XXX> via <cashier's check/money order/wire transfer>. If I do not receive your response to this offer within fifteen calendar days, I will rescind this offer and it will no longer be valid. I look forward to resolving this matter quickly.
Pay for delete is when a borrower agrees to pay off their collections account in exchange for the debt collector erasing the account from their credit report. Accounts that are sent to collections typically stay on a consumer's credit report for seven years from the date of first delinquency.