Delete Collections and Boost Credit Scores With These 4 Proven Tactics

Hey, credit heroes. There are four proven tactics for removing collection accounts from credit reports and today I'm going to walk you through each one, so you better stick around. My name is Daniel Rosen and welcome to Credit Repair Business Secrets. When a debt goes to collections, the impact can be devastating. They damage your credit score, they make it harder for you to get a loan or a car, and debt collectors start harassing you. But worst of all, collections are one of the most common derogatory items that appear on credit reports. The recession, increased dependency on credit cards, skyrocketing student debt, and the lack of affordable health care are all making life more difficult for more people and forcing them into collections. So if you're in this position, you're not alone. Roughly 28% of Americans have at least one debt in collections, and having just one collection can decrease your credit score by as much as 110 points. And that's a lot. Thankfully, you can delete collections from credit reports. It is a process. So today I'm going to share with you four proven tactics that are going to help you to get the job done as fast as possible. Here's how this relates to us. For anyone new to credit repair, A collection refers to a lender attempting to recover payment on a debt that a borrower has failed to pay. When a debt is moved to collections, and it usually means that the lender has exhausted all other options for collecting payment and has now sold the debt to a third party collection agency to try to recover the money. These debt collectors are aggressive. They stretch the truth and in many cases they break the law. And if you want to learn how to fight back against shady debt collectors and make money suing them, check out my interview with Vance Dotson. It's a good one. Here's the thing to remember. Collections stay on your credit reports for up to seven years and removing them is a process. And even if the debt is paid off, the problem doesn't go away. Paying off a collection can cause credit scores to increase, decrease, or have no impact at all. It all depends on what information changed with the collection account and the other information on the credit report. Even FICO admits whether or not you pay your collections off is really a personal decision. There are benefits to paying off debt. You can avoid collection lawsuits and interest fees. The collection will appear on your credit report as paid in full or settled, which may influence lenders. And newer credit scoring models like FICO 9 will ignore zero balance collection accounts entirely. But most lenders still use older scoring models like FICO 8 that still factor in zero balance collection accounts. Here's why this is important. Just because newer credit scoring models ignore collections with a zero balance doesn't mean that lenders will ignore them. Credit bureaus will still show these collections on your full credit report. Lenders will see them when they review your full credit history, and you'll have to be prepared to explain why they're there. So whether you pay the debt off or not, you still want to remove the collection from your credit report because that will make your score go way up. Here's what you need to know. As always, your first step is to dispute any incorrect information on your credit report. But beyond that, there are four proven tactics for removing collections from credit reports. Tactic number one Send dispute letters directly to the credit bureaus requesting verification of the debt and the removal of any unverified items from the credit report. We call these first letters Round one. Regardless of the type of collection, the bureaus are required to contact the furnishers that reported your information to verify the debt. After contacting the furnishers, they only have 30 days to respond. If they don't respond in time, boom. The items you disputed are deleted automatically. If you don't already have a Round one Dispute Letter template, you can download it free right now@creditrepaircloud.com dispute letter templates and I'll put the link over in the Show Notes. If the bureaus do not respond appropriately, or if they respond with a stall letter, you may need to request a reinvestigation demand to know their method of verification or send them a bureau warning letter. This process does take time, but if you don't get the results you want, you may want to file a complaint with the cfpb, the fdc, or your state Attorney General, or even bring in an FCRA attorney to take them to court. Reinvestigation method of verification and warning letters are also free to download at that very same link. Again, it's creditrepaircloud.com dispute letter templates tactic 2 challenge the collection with the original creditor using section 312 of the Fair and Accurate Credit Transaction act. Or send a validation letter to the debt collector directly from requesting that they prove that the debt is accurate. This can also go back and forth just like it did with the bureaus, but again, the key is persistence and pressure. If the original creditor does not delete the item, you can follow up with reinvestigations, warnings or complaints. Tactic number three if the debt collector ignores your debt validation request and more than a month has passed. Send them a validation of debt to Estoppel by Silence letter. This letter tells them that by ignoring you and being silent, they must agree to your argument. This is backed up by case law and could stand up in court if it ever got that far. If the debt collector does not delete the item, you could do the same process of demanding reinvestigation, sending warnings, filing complaints, or partnering with an FDCPA attorney to file a suit against the collector. At this point, if you've completely exhausted your options with the bureaus, the original creditor and the debt collection agency, it may be time to bite the bullet and negotiate a payment arrangement directly with the debt collector. Tactic Number Offer the lender or collection agency a paper delete or a settlement. In this situation, you'll offer either a full or partial settlement in return for the deletion of the negative items. Most debt collectors will do this, but most will want the full payment. Here's the thing to remember Removing the collection account from your credit report will raise your score a lot, but it doesn't actually remove the debt itself. You still owe that debt and that debt collector can still take you to court and sue you. But remember, they've usually bought the debt for much less than you owe, so you can usually negotiate with them. Now. It's important to be very careful when settling an old debt. If you have a collection account and it's scheduled to fall off your credit report soon and you negotiate a settlement, it will restart the status date and stay for an additional seven years showing as a paid collection, which can do more harm than good. That's why it really helps to try for a pay per delete where you're paying them to remove the item. Just make sure you always get proof of the agreement in writing before moving forward. Legal Disclaimer the information in this video is for educational and informational purposes only. It does not constitute legal advice, nor does it substitute for legal advice. Persons seeking legal advice should consult with legal counsel familiar with their particular situation. As consumer credit laws vary by state, here's my final point. Dealing with collection accounts can be financially and emotionally draining, especially when debt collectors are involved. Remember, always be persistent, apply pressure, follow the proven tactics, and don't give up. And I'll end by saying if you don't already have a credit repair cloud account, check it out. It's the software that most credit repair businesses in America run on. Just sign up for a 30 day free trial at creditrepaircloud.com freetrial and if you'd like to change lives and grow your credit repair business? Check out our Credit Hero Challenge. It's a live experience that has helped tons of credit heroes to get certified in disputing and gain confidence as they run their business on a solid foundation so they can change a lot of lives and make a great living in the process. We're starting the next challenge very soon, so you want to join before the doors close or you're going to have a long wait until the next one. So sign up right now@creditherochallenge.com and if you're finding value in the things that I share on this podcast, click below to subscribe and follow. Also, give me a five star review, give me a thumbs up or share the show and help me to change more lives. If you'd like to read the show notes, they're posted on my blog. If you have a question or a comment, drop it down below because I read each and every one of them. I would love to hear from you and I'll respond as soon as I can. And if you want to learn more about how to fight back against debt collectors that break the law, check out my interview with Vance Dotson. It's amazing. So take care Credit Hero, and keep changing lives.