Might try a "pay for delete" for a collection account...how do those really work?
July 20, 2009 6:58 PM   Subscribe

Pay for delete???? Any idea how to begin? I have always had good credit. Recently a old charge from AT&T showed up on my credit report for $50 that had gone to collections. I am guessing this was a balance left after canceling (tho I am not 100% sure). I had previously tried to settle this balance and got the run around, so I finally gave up and did not hear anymore so thought all was fine...I am part of a credit monitoring service so I got work right away that the "hit" had affected my low 700's score and now I have a low 600's score. I have googled my situation and learned about a "pay for delete"...I am however, not sure if I should begin with AT&T or the Credit Agency (which is the Collection Company of America CCA)...the collection originally came through as being from CCA but now it shows up as AT&T on the report. Previous attempt by phone to talk to each company and ask for help was not successful. NOt sure how to proceed, or if it is worth the headache?
posted by mdn31 to Work & Money (9 answers total) 6 users marked this as a favorite
Well, file a dispute first. If you can't even get them on the phone, they probably are not going to try to challenge the dispute.
posted by delmoi at 7:02 PM on July 20, 2009

Do you really need more credit immediately or in the near future? If not, I wouldn't worry about this. Your credit score will repair itself over time.
posted by orange swan at 7:05 PM on July 20, 2009

Its woth the headache you can find yourself with back to the credit score you deserve. I was in you boat awhile ago and solved the problem without paying a dime out of pocket excluding postage. I really reccomend the MyFico forums, its really helpful. Verify it First! They may not even be able to verify that you owe the money. If they can't make sure of that how can they make sure that no one will ever come back claiming that you haven't paid it .
posted by Rubbstone at 7:15 PM on July 20, 2009

Best answer: I had an issue like this recently. Old creditor I once had an account with came up on my report as "Collection" status, for no particularly good reason that I could figure out.

Couple of things — on your credit report, there is a phone number listed for the creditor. Try calling it. Often it gets you to a different office than the number they give out on their website (which I swear is just a decoy to try and route as many people as possible into Voice-Prompt Hell so that they'll just give up). I'd do that first.

Second, you could write a letter to the company. There ought to be an address also listed on your credit report. Be sure to reference any accounts that you might have had. Ask for an investigation of the charges and an explanation of why it went to collections. If you have any final bills that show a zero balance, include copies. They might just write it off.

What you're going for is a letter from your creditor saying that the debt has been paid off and/or never existed in the first place. Then you take this letter and send it to the credit agencies, and they can quickly remove the offending line from your report and rescore. (I had this portion done by a 'credit repair agency' for about $50. I think you can do it yourself if you have time, though.) There is apparently a standard form that some high-volume creditors send out, basically requesting that the credit bureaus remove something from your report. In my case, I just got a letter saying that the debt was paid in full as of a particular date, and that worked just as well.

Alternately, you can file a dispute with the credit bureaus (you have to file one at each of the three), and explain the situation. They will do some research, sometimes try to contact the creditor, and depending on the outcome may or may not delete the item from your report right away. There are conflicting opinions on what sort of research they actually do, and some people believe that if the debt is more than a few years old, or if it's fairly small, they may just delete it without trying to actually follow up at all.

It's up to you whether you want to try the credit-dispute tactic first; if it doesn't work (i.e. if the bureaus refuse to remove the item) you can always follow up with the creditor directly, try to get a letter, and then send it to the agencies directly.

If you are about to apply for a loan you might want to try both tactics at the same time and see which one goes through first. In my case, I had 2 of the agencies remove the item from my report based on the dispute; the other one took its sweet time and didn't do anything until the credit-repair company beat them over the head with the creditor letter I'd obtained.

And yes, this is definitely worthwhile stuff to do, if you think you might buy a house/car/boat/whatever in the near future (7+ years). My credit score went up over 100 points as a result of eliminating the one 'Collection' item and this translated into 0.25% on a mortgage.

The 'pay for delete' business sounds shady to me. If the debt is correctly listed on your report — you really did have a remaining balance that you forgot about at some point — I suppose you might be able to call the company, pay the balance plus any late fees or charges, and get a letter from them acknowledging payment and asking for removal from your credit report. If that's what you're doing, make sure you ask very explicitly for a letter that you can send to the credit bureaus to have the item removed as a condition of payment.
posted by Kadin2048 at 7:18 PM on July 20, 2009 [3 favorites]

There's legit "pay for delete" and shady "pay for delete". In the case of the former, you're paying them to correct an error which you could correct yourself - kind of like paying a tax agent to do your tax even though you could do it yourself. The shady ones imply that they can get accurate but inconvenient information removed from your credit record.

If you're considering paying someone to handle this for you, make sure you're very clear about what they're promising and how they intend to go about achieving it - there are a lot of predators out there in the credit repair and debt mediation industries, so be careful who you deal with.
posted by Lolie at 7:29 PM on July 20, 2009

For what it's worth, about ten years ago I had a debt of about 20UKP to a book club for a parcel that had gone astray.

When I applied for a mortgage several years later, that one book club debt showed up on my credit record and held up the process of the mortgage. I had to track them down, pay it off, and get a letter confirming the debt was paid before the sale of my home could go through.

If I were you, I'd try to track down the company and resolve it. Don't let a little thing like this have an effect on your credit rating.
posted by vickyverky at 8:04 PM on July 20, 2009

For what it's worth, you SHOULD worry about what the hit to your credit score means, even if you do not think you immediately need new credit.

For example, more and more companies are now relying on credit scores. You might not know it, but car insurance companies look at your credit score.

More importantly, the terms of any credit card you now have can change for any reason - the interest rate can be raised, or your available credit lowered, for example. A hit to your credit score would be a great excuse to try to squeeze more money out of you, and credit card companies are doing this sort of thing very often these days.

That said, pay for delete is really shady - you should be able to dispute the charge yourself very easily. If the company responds, you can pay it, and request that they delete it once you pay it in full (often companies are happy to do this). If they don't respond, the credit monitoring agencies are required to delete it.
posted by lesli212 at 8:31 PM on July 20, 2009

Best answer: Yes, dispute the charge! Call the credit scoring people and say that you don't know what the charge is, you have never received anything from collections about it, you've tried to call the number and never gotten through, and you've concluded that it's a false charge and you want to dispute it. The credit score company will need to verify it and if they get the same runaround they have to delete it from your report.

I did this successfully about a decade ago. It was kind of a pain (since there are the 3 credit scoring companies and I had to do it with all 3) but very satisfying once complete.
posted by miss tea at 4:57 AM on July 21, 2009

One other minor thing to add: when you're dealing with the credit bureau, they may mention that you can have a statement put in your credit report, basically, an explanation from you as to what your personal situation is, why item x happened, etc. You have the right to do this.

My recommendation: don't do it. As someone who has paged through actual reports in the past, I've seen reports where the person has placed one of these statements in their report, and the statement was still there even though the original deliquencies or disputes had aged away and disappeared. I would have had no idea there had been a problem except for that statement.

Kind of a minor thing, a personal statement shouldn't count against you in any case, and shouldn't affect your score, but it could lead to some odd conversations if you're sitting across from a mortgage broker with a printed copy of your report several years from now.
posted by gimonca at 6:40 AM on July 21, 2009

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