If you’ve been searching for ways to clean up your credit report, pay for delete letters may a tool you need in your arsenal.
Let’s say you submit an application for credit and are denied as a result of past credit missteps. This prompts you to review your credit report. And when you take a look, you notice a collection account that’s dragging down your credit score and making it nearly impossible to qualify for credit card or loan products. Bummer.
Or maybe you were aware a collection account exists on your credit report because debt collectors call your phone day and night. But you aren’t quite sure what the best course of action is to make the calls stop and fix your credit at the same time.
That’s where pay for delete letters come in. Not only can they get the debt collectors off your back, but there’s also a strong possibility that they’ll help revive your mangled credit score.
How Do Pay for Delete Letters Work?
Pay for delete letters are relatively straightforward. It’s a request to the lender on your behalf to delete the collection item from your credit report in exchange for payment. And it doesn’t have to be for the full amount owed. Most consumers offer a fraction of what’s owed and negotiate from there.
But shouldn’t you just pay the debt off to make it go away? Not necessarily. Collection accounts linger on your credit report for seven years from the original date of delinquency, so you have the option to wait until the fall off. However, you could be sued in the court of law and handed a judgment, which does even more damage to your credit score. As a result, most consumers will pay the balance in full or work out a settlement arrangement to avoid this fate.
The problem is paid collections don’t magically disappear from your credit report. Instead, they linger until the reporting timeline lapses and simply updated to a paid or settled collection. End result: little to no improvement to your credit score, which is probably one of the primary reasons why you took care of the debt in the first place. (Quick note: if you’re applying for a home loan, the lender will require that you pay off or settle any outstanding collections before they can approve your application. You should also know that some newer credit scoring models ignore small collection accounts and select paid collections altogether).
Are Pay for Delete Letters Effective?
There’s a lot of chatter about the effectiveness of pay for delete letters. Some swear by them and others dismiss them as a shady, unethical, and borderline illegal way to clean up your credit report.
Reasoning: credit bureaus are legally required to report accurate and timely information on your report. In turn, lenders and creditors must ensure that the data furnished to the credit bureaus accurately depict what’s going on with consumer accounts. But if you’re able to convince the collection agency to enter into a pay for delete agreement, the information presented on your credit report is no longer accurate and doesn’t tell the entire story about a particular debt.
Ultimately, it’s up to you to decide if you want to go this route. But pay for delete letters have worked for many who were willing to be persistent to go the extra mile to get the creditor or collection agency’s attention. And if you find that it works for you, be sure to only propose an amount that you can actually pay or you’ll burn the bridge. (And keep in mind that the debt collector probably won’t be open to payments).
Writing a Pay for Delete Letter
It doesn’t take a ton of effort to draft up a pay for delete letter. But before you get started, you want to peruse your credit report to ensure the collection account is showing up in multiple places.
If you find that this is the case, send dispute letters through the credit bureaus asking that the collection agencies prove that you actually owe the debt. Doing so will weed out those that have no claims to the debt and remove all the extra entries on your report. Once you’ve determined who actually has rights to collect on the outstanding balance, send a written request asking that they send a detailed breakdown of what you owe. (Important: never admit that you owe the debt).
Note the contact information as you’ll be using it to reach out. Also, come up with a number that you’re willing and able to pay to satisfy the debt. Once you’ve done so, draft up a letter asking that they delete the negative entry on your credit report in exchange for payment.
You should include the following components in your letter:
- Your name and address
- Debt collector’s name and address
- Account number
- Original creditor
- Outstanding balance
- Request that a goodwill removal be initiated without admitting that you owe the debt
- The amount you’re willing to pay and by what method
- Offer expiration date
Can you arrange a pay-for-delete agreement by phone?
You may be tempted to call, but refrain from doing so as you won’t have a paper trail. The debt collector can tell you anything on the phone, but what holds up in the event that they don’t fulfill their end of the bargain is written proof of the arrangement.
Sample Pay for Delete Letter
(Debt Collector’s Name)
(Debt Collector’s Address)
(Original Creditor’s Name)
Dear (Debt Collector’s Name),
I recently reviewed my credit report and was made aware of a balance I allegedly owe for the account from (insert original creditor’s name) listed above.
I assume no ownership or responsibility for this debt, but I would like to propose a settlement offer if you agree to the following terms and conditions:
- The amount paid will satisfy the outstanding debt obligation in full. This means that you cannot sell the debt to another party.
- You agree to keep this arrangement confidential and not disclose any part of it to third parties.
- Upon receipt of payment, your company will remove any entries or information related to this account in its entirety from my credit report. This should be done for each of the credit bureaus, including Equifax, Experian, TransUnion).
- Once the account is deleted, you will not relist it as settled or paid in full.
If you’re willing to follow these terms and conditions, I will remit payment in the amount of (insert amount). Funds will be sent by (insert payment method; cashier’s check or money order preferred).
I’d like to reiterate that I am not assuming responsibility for this debt or promising to pay. I’m simply proposing a settlement offer that will only be executed if you agree to the terms and conditions listed above.
This offer is valid for (insert timeframe) days. If you’d like to move forward, please respond in writing on a company letterhead. The letter should also be signed by a member of upper-management that has the ability to uphold the terms and conditions of the agreement.
Thanks in advance for your prompt attention to this matter.
(Your Name typewritten; do not insert your signature)