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    What Is 'Pay For Delete' And Is It A Good Tactic?

    Pay For Delete

    Difficult financial situations happen. Perhaps you didn’t remember a debt you owe or maybe you find yourself in a hole that’s not easy to get out of. Whatever the reason, collection debts happen. People in these situations often want a way out to improve their credit and move on. 

    It’s possible to get debt collection reports removed. This can go a long way in repairing some of the damage done to your credit. Poor credit can make everything from renting a car to taking out a student loan more difficult and expensive. 

    Pay for delete is a term that refers to what happens when you offer debt collectors payment, and in return, they agree to remove collections accounts from your report. This practice lies within a grey area, and it’s not guaranteed to work 100% of the time. Here’s what you need to know about negotiating a pay for delete deal. 

    How Does It Work?

    If you’re interested in pursuing the pay for delete tactic, it’s relatively simple to attempt. First, you’ll need to get in touch with your debt collector. You can do this with a call or a letter. You’ll then suggest a deal between you and the collector. 

    The deal is that you’ll pay off your debt, and in return, the collector will delete the account from your credit reports. Why is this helpful? The better your credit history, the better your credit score, and the more opportunities you’ll have to save.

    However, the pay for delete tactic doesn’t always work. Successful cases are becoming rarer. In general, creditors are legally required to report complete and truthful information to the credit bureaus. This helps to sustain the integrity of credit reporting. 

    A creditor can choose not to report the information, which is where the pay for delete deal comes into play. This tactic is highly discouraged by the credit reporting agencies that want to uphold legal and ethical standards. 

    How It Impacts Your Credit Score?

    How much the tactic will improve your credit score is highly subjective. Your credit score is comprised of different factors such as payments, debts, and so on. If you have active debts from multiple collectors, you might not see much of an increase in your score. 

    Even one single missed payment can impact your credit score. Moreover, when a bill or missed payment report is sent to collections, then the situation becomes even direr. Since the pay for delete tactic removes a negative entry from your credit history, it could very well improve your score.

    Is Pay For Delete An Outdated Option?

    Collections on your account may remain there for up to seven years. After paying the debt, the account will still appear on your credit reports as paid collections. 

    The good news is that the latest credit scoring models, FICO 9 and VantageScore 3.0, ignore paid collection accounts. Instead of going through the headache of negotiating the deal yourself, these new methods essentially do it for you. 

    The pay for delete method will likely become increasingly relevant since most creditors don’t use the most recent FICO and VantageScore models.

    Alternatives To Consider

    Many people aren’t comfortable with this particular tactic. This may stem from an ethical standpoint, or simply because they’re hesitant to negotiate with a creditor. Either way, there are other avenues you could consider to help improve your credit.

    Raise A Dispute

    Collections can and do occur at times because of mistakes. If your debt is a mistake, make every effort to dispute the claim. It would be a waste of your hard-earned resources to pursue the pay for delete method. If the debt was indeed an error, it’d be deleted.

    Ask For A Verification Of The Debt

    After a debt collector makes contact with you, they’ll have five days to send you a debt validation letter. This letter will state that you have the right to dispute the debt within a time frame of 30 days. It’s important to note that this request must be made in writing. If the collector can’t provide proof that you owe the debt, then you’re not required to pay. Furthermore, the event is removed from your report. 

    Keep Making Payments

    Even if you secure a deal with the collection agency, the original debt will still remain on your credit report. Keep paying the debt off and don’t miss payments. Missed payments negatively affect your score. 

    Bottom Line

    Dealing with collection agencies is a notoriously difficult and uncomfortable situation to be in. The only way out is to take positive steps toward better financial health. Carefully consider your options. 

    As you move forward, keep careful track of all debts. Additionally, make sure to take proactive steps like setting up automatic payments. This will help you avoid any possible missed payments that could hurt your credit score.