If your credit score could use a little help, you may consider paying for a delete letter. Before you do, you should understand what this letter is and how it can affect (or not affect) your credit.
We know you work hard for your money and the last thing you want to do is waste it. Read the following carefully so that you understand the letter and how it can help you so that you can make a decision.
The Pay for Delete Letter Defined
First, let’s look at what a pay for delete letter is and how it works.
The pay for delete letter only pertains to collection accounts. If you’ve defaulted on an account long enough that it reached a collection agency, you may be able to get it off your credit with the pay for delete letter.
The meaning of this letter is that you agree to pay the collection agency for the debt they purchased in your name. In exchange for the payment, you want the collection deleted from your credit report. This differs from reporting it ‘paid as agreed’ or ‘satisfied.’ It means that the collection agency will remove the collection from your credit report entirely.
Why Choose the Pay for Delete Letter?
You might wonder why someone would go through the effort of the pay for delete letter. It’s basically to help you improve your credit score faster. If you paid the collection, but didn’t ask for deletion of the account, it will sit on your credit report for 7 years. Granted, it won’t have a major effect on your credit report after a few years, but it will still be there, feeling as if it is haunting you.
Remember, you can only use this strategy if your account has reached the collection agency. If it’s still with the creditor, they probably will not agree to delete the account from your credit report.
Typically, you ask for this letter when you genuinely overlooked a bill or when you just didn’t know the debt existed. This happens a lot in the medical industry. Consumers often think that their insurance is handling the bills, when in fact, they owe the balance. The miscommunication between everyone can lead the bill to head to the collection agency. Medical practices usually only wait 90 days before they sell your debt off to the collection agency to handle.
If this happens, you can plead with the collection agency. Let them know your situation. Be honest and provide any proof you have that made you think the insurance company was handling the bill. When you agree to pay the bill in full, the collection agency may use the information you provided to agree to delete the collection from your credit report.
How to Make Sure the Pay for Delete Letter Works
A collection agency isn’t under any obligation to approve your request for deletion of the account. They have the right to keep it on your credit since your account ended up in their laps.
But if you want to make sure that a collection agency does follow through, use the following steps:
- Get everything in writing. Even if you get the collection agency to agree to delete the account while talking to them on the phone, you need proof in writing. A verbal agreement will not hold. The collection agency can deny any such promises unless it’s in writing.
- Pay the bill in full – If you are trying to get a settlement on the amount because you can’t afford the full payment, you may have a harder time getting the pay for delete letter to work. Collection agencies want to collect the full amount owed in order for it to be worth their while to buy the debt from the medical practice in the first place.
Other Ways to Get Help Your Credit Score
In all honesty, a pay for delete letter can be viewed as unethical. If you have a debt with the collection agency, it should be on your credit report.
What you can do instead is ask the collection agency to report the debt ‘paid in full,’ assuming that you pay the entire balance. If you only pay a part of it, but the collection agency agrees to settle, they can record it as such with the credit bureau. They can mark it ‘settled as agreed’ or something similar to let future creditors know that you made good on your debt in some way.
You could also wait for the statute of limitations to run out and the collection to fall off your credit report. Right now, collections can stay on your credit report for 7 years. But if you call the collection agency, pay the debt, or do anything else to ‘reactivate’ it, the clock starts all over again. Keep that in mind if you are nearing the end of your statute of limitations. Don’t reactivate the collection or you’ll see it on your credit report for another 7 years.
The pay for delete letter may seem like the right choice, but it’s not your only option. What you should focus on is getting your bills paid on time and your collections paid as you can. This way your credit score will eventually increase especially as the debt gets older and even falls off your credit report.