So far, we've discussed how to get negative and false items removed from your credit reports in order to improve your score. We've been working under the assumption that these harmful accounts were added erroneously, either maliciously or by accident. Sometimes, there are going to be harmful items on your credit report that do belong to be there, that are accurate. You cannot dispute these, but you can request validation of these debts.
What is pay to delete and how does it work?
When your debt is in the hands of a collections agency, you can offer to settle the debt with them. For instance, they pay have paid 12 cents on the dollar to own your debt, so if you can offer them 25% or 30% of the original amount to settle it, they're still double or nearly tripling their money, and not having to waste any resources on hounding you for months or years.
In return, they will take the necessary actions to remove the account from your credit report, effectively deleting the negative item that was bringing your score down.
How To Conduct a Payment for Deletion
This is a three step process. First, you need to find out who owns your debt, next you need to contact them, finally you'll pay the debt.
- Step 1 – Your credit report should say which collections agency owns your debt, if you haven't already heard from them directly. If you're unsure, get in touch with whoever you originally did business with that resulted in the debt in the first place (A dentist, your cable TV provider, etc.)
- Step 2 – Next you'll write them a letter with an offer to settle the debt for a lower amount in exchange for the account to be closed and for the negative item to be removed from your credit score.
- Step 3 – Once they've agreed, you pay the amount and keep a copy of the agreement just in case they ‘forget' to take care of it. Always ask them for a copy of the agreement in writing. It's rare for them to not honor the agreement, but if that does happen, it's time to speak with a lawyer. Most likely, a nudge from an attorney will get the ball rolling again. Alternatively, you could contact a lawfirm which specialized in credit repair, such as Lexington Law.
More information about Pay for Delete
Once you've made your offer, just keep in mind that they certainly don't have to accept it. If they do accept it, you've essentially entered into a situation where you've agreed to pay off a certain percentage of the amount which they claim that you owe, but doing so does not mean that they're accepting the debt or admitting that you actually owe it. In exchange for the payment, you're getting a signed letter from them agreeing to remove the debt and to let the credit bureaus know that the debt is no longer outstanding.
If they seem to resist at first, press a little bit more. The first person you talk to may not always be able to take care of this for you. At the end of the day, the collections agency is in business to make money. If the debt doesn't get paid, they're in the red.
They buy debts for so inexpensive that they don't need to make a huge percentage of it back. If your proposal covers what they paid and allows them to make a reasonable profit, they'll be glad to have another profitable debt collection off the books. In that line of work, they pay so little to buy debt since a lot of it will never be paid at all, not even partially. Getting even some of the money back is still a win for them, you just have to go about it right and handle yourself accordingly.
Remember: A verbal agreement is not enough. Make sure you get it in writing, otherwise the deal is worthless. You could pay them the percentage of the debt that you agree upon over the phone, and they could turn around and just apply it to the balance owed, rather than honoring the agreement to settle the debt. You cannot, and should not, take their words for this – get it in writing.
Sample Pay for Delete Letter
Here is a sample pay for delete letter. Please don't use this letter verbatim, it is only meant to serve as an inspiration for you to write your own. We are not lawyers and we are not qualified to give you any kind of legal advice. This document has not been written, or endorsed, by a lawyer.
This is just an example letter. If you aren't comfortable drafting your own letter, consider getting in touch with a credit repair company to handle this for you – many of them offer very reasonable rates and you don't risk doing anything to accidentally damage to your credit score (which can happen if you go about this on your own and aren't extremely careful.)
Generally, the amount you should offer is around half for newer accounts, and as lower as 25-35% for older accounts.