In this article, we’re going to look into how many points your credit score will be increased by if a collection is deleted. But first we are also going to look at some related questions, and cover some basics about credit scores.
To be considered to have a good credit score, you need to have a credit score of at least 700, to be considered creditworthy. If you have a credit score of 750 or more, then this is considered to be excellent.
Credit scores of around 650 to 700 are seen as fair to middling, and it may be possible for you to get credit with this credit score.
Anything below 649 however, is considered a bad credit score, and you will really struggle to get credit if your score is at this level.
If you are contacted by a collection agency, informing you that you owe money to them, by law you have the right to the detailed accounting of the debt they claim you owe.
That way, you are able to see where they got their figures from, and can then determine whether said claim is actually valid.
It is only when you have this information to hand that you can see whether its claims are false, and whether you can legally dispute them.
The good news is that contacting a collection agency in regard to this will not affect your credit report, or in turn your credit score.
However, late payments and collections can account for up to a whopping 35% of your credit score. This means that collection accounts could drag your credit score down by as much as a staggering 100 points or more.
Although the exact figure will depend somewhat on what else is in your credit report.
And, if you’ve been paying attention, you’ll see that a 100 point dragging down of your credit score could potentially be devastating. It can literally mean the difference between having a good credit score and having a bad one.
Unfortunately, despite what many people believe, paying off a collection does not actually improve your credit score. Once you have a negative mark like that against your credit score, it will stay there for an entire 7 years.
During that 7-year period, you will have the opportunity to work on your credit score, provided that you can still get credit, which may in many cases be somewhat unlikely.
However, simply paying off the collection amount is simply not enough to improve your credit score, during the next 7-year period, and you would need to have it removed entirely from your credit report.
If you only have one collection account against your name, once it has been deleted it can boost your credit score by about 150 points…
If you have several collection accounts, however, you may not see any increase at all.
The first thing to do when you’re approached by a collection agency to pay off a debt, is to see whether they are correct…
This means that you will need to obtain details of the debt from them. Once you have done that, you should check whether you were signed up in a legally binding contract for the product or service that they say that you owed money for.
If you feel that there is an error on their part rather than on yours, then you should absolutely dispute this with the credit bureau.
If the collection agency is in their rights, however, the most effective solution to this issue is to pay the amount owed immediately if at all possible.
The reason we say this is not only because it is good and right to do so, but also because in the newest versions of FICO® and VantageScore®, paid collections don’t hurt your score but unpaid collections do.
Then, once you have paid the collections, we would suggest that you appeal to the credit bureau, and request for a goodwill deletion, based on your repayment of monies owed.
Sometimes it’s possible to pay to have a collection stain deleted from your credit score, but this can come at quite a high cost, which can be particularly difficult to afford, especially if you are already struggling to obtain credit.
If you are approached by a collection agency saying that you owe money, remember that it won’t affect your credit score to get in touch with them. Then you need to investigate their claims to see if you can dispute them.
If not, you should pay off the monies owed immediately. Once the payment issue has been resolved, you may then be in a position to request a goodwill deletion.
And, depending on how many collection accounts you have, your credit score can improve by as much as 150 points, which can make all the difference.