We all know that in tough economic times it can be hard to make ends meet. If your bills have gone to collection is can severely affect your credit score. You can improve your credit score by deleting collection accounts. When banks have trouble collecting payment from debtors, they hire a debt collector (those are the people who call you at home or at work). When you pay off your debt, it’s important to work with the collector to pay off your loan and improve your credit score. And you have many options.
Your best case scenario is to have the account deleted from your credit report in exchange for payment. You will need to request the removal through a pay for delete letter to the collector offering a settlement payment if the collector deletes the account from your credit reports. You can also contact them by phone, but you’ll want the agreement in writing before taking action. Most collectors will want payment in full rather than the settlement payment, but will delete the account when full payment is collected.
If you cannot have the entry completely removed, offer a settlement payment to have it updated as “Paid in full”. Another option is to have the Account marked “Paid. Settled.” This will not boost your credit as much as a “Paid in Full” would, but may be your only option if you are unable to pay in full.
Make sure your keep a record of all your conversations, agreements, and proof of payment. Monitor your credit report to make sure the collector updates the account as paid. If the collector does not update the account, dispute the account with the credit bureau, providing proof of payment if necessary. The only unacceptable scenario is to pay the collection without having having fact reflected in your credit report.
Of course, always consult your CPA, tax attorney or whomever you trust like that.