|Don't count on getting your collection account deleted.|
Death of the Pay for Delete
Let me explain. For those of you who don't already know, a pay for delete occurs when you pay off a collection and in exchange the collection agency deletes the negative entry from your credit report. The collection agency gets its money and you get better credit. Everybody wins, right? Not exactly.
You see, the credit bureaus have this little hang-up about accuracy. Imagine that. The bigger picture is at stake. The credit bureaus may maintain your credit information, but they make their money selling FICO scores to lenders. FICO scores are supposed to help lenders make financial decisions by accurately predicting your risk of default. A past collection account on your credit report is a great big red flag that practically screams, "Don't trust me! I stopped paying in the past and I'll do it again!" If the collection agencies granted everyone a pay-for-delete, that would skew the FICO's reliability – costing the credit bureaus money in the long run.
(Just for reference, the credit bureaus would really prefer that FICO tank just so they could push their ridiculous VantageScore on lenders, but since VantageScore is also based on your credit information, the same logic applies)
So what do the credit bureaus do? Simple. They lay the smackdown. If the credit bureaus find out that a collection agency has been handing out pay-for-delete agreements to debtors the credit bureau revokes the collector's ability to report debts. That may not sound terrible to you, but its a death sentence to a collection company.
Still Trying to Get Collection Accounts Deleted?
So the scenario goes something like this...you contact the collection agency, make an offer in writing to pay the debt in full in exchange for deletion and sit back and wait with baited breath for the collection agency's response only to receive something along these lines:
|Guess who won't play ball?|
"We are not authorized to..."
"We cannot alter.."
"Our company does not modify..."
No matter what your form letter says, it can be summed up like this: The credit bureaus don't let us do that. Unfortunately, it usually comes out sounding like "We refuse to help you." This angers you and doesn't help the collection agency either. So you don't pay, the collection agency doesn't make any money, and nobody's happy but the three fat men on the hill (the credit bureaus, who could care less about you and your credit repair efforts).
Prior to the smackdown, pay for deletes were all the rage. Every credit repair forum you visited couldn't say enough about pay for deletes. Everyone had a different method or theory for "duping" the debt collector into accepting the pay for delete agreement. In reality, collection agencies were on board with this. After all, they don't really care if your credit report is accurate either – they just want their money.
Remember, collection agencies still play the game, but for them its a numbers game. Lets look at these two scenarios:
Jane owes $172 to Big Bad Debt Collector for an old cell phone bill she never paid. That $172 debt is really hurting her credit and she'd like to have it removed. Jane's smart enough to know that simply paying it doesn't help her credit one iota, so she writes Big Bad a pay for delete letter in the hopes that it will be willing to erase the negative entry in exchange for payment.
|Money talks....to debt collectors|
Josh owes Big Bad Debt Collector a little over $5000 for an unpaid deficiency on an old repossession. Through the help of his attorney cousin and some heavy research, Josh has managed to get rid of the repossession notation – now he just has to deal with that monstrous collection account. Fortunately for Josh, the statute of limitations on the debt has expired so there is no chance that Big Bad could sue him. After six months of saving, Josh has $3700 to put toward the debt, but he won't bother if Big Bad won't delete the collection from his credit.
So who has the greatest chance of winning the pay for delete game? Josh of course. Collection agencies still hand out pay for deletes, but they choose the recipients with care. The bigger the debt, the greater your odds of getting it deleted. Jane has options for having her $172 debt removed, but a pay for delete isn't one of them.
Now you have to ask yourself, are you a Josh or a Jane? I'm very interested in hearing others' experiences with this. Please, add a comment, let me know how your pay for delete attempt went, be it a good experience or a bad one.
Collection Accounts and Your FICO Score
Why Credit Bureau Collection Disputes Rarely Work
Collections on Your Credit Report