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Is Pay for Delete Worth It?
Collection accounts and other negative items on your credit report can drag down your credit score. That can make it more difficult to qualify for personal loans or other lines of credit at favorable interest rates.
Pay for delete is one option you might consider when trying to improve your credit. In a pay for delete arrangement, you’re essentially asking a debt collector to erase negative items from your credit reports.
But how does pay for delete work? And is it a legitimate way to raise your credit scores? Here’s a closer look at what you should know.
What Is Pay for Delete and How Does It Work?
Negative items on your credit history, including late payments, charge-offs and collection accounts, can hurt your credit scores in a big way. That’s because payment history is the most important factor for FICO credit scoring and one of the more important factors in VantageScore credit scoring.
When you pay for delete, you’re essentially offering a creditor or debt collector money to fulfill a credit obligation. In exchange, the creditor or debt collector agrees to remove any negative information relating to the account in question from your credit report.
Pay for delete is something you can attempt yourself or through a credit repair company. If you’re doing it through a credit repair company, you may pay a fee for their services on top of whatever you agree to pay the collection agency.
Can Pay for Delete Improve Credit Scores?
In theory, pay for delete sounds like a simple way to boost your credit scores.
Say you have a $1,000 medical bill that’s gone to collections, for example. The collection account is dragging your credit score down so you offer the collection agency $500 to settle the balance and delete the negative account history from your credit report. If the collection agency agrees, the account would theoretically disappear from your credit history.
But there are some problems with pay for delete. For one thing, federal law requires creditors to report accurate information if they report accounts to the credit bureaus. That includes collection accounts, late payments and other negative items.
So if you’re attempting to pay for delete with an otherwise accurate account the collection agency’s hands may be tied legally. And even if they agree to it and the negative information is removed, it’s possible that a collection account could reappear on your credit history later, wiping out any credit score gains you might have made.
Pay for Delete Alternatives to Boost Credit
Negative items, including late payments or collections, can stay on your credit for up to seven years. In the case of bankruptcy filings, those can stick around for up to 10 years.
If you’re wary of using pay for delete to improve your credit, there are some other things you can try to raise your score:
- Pay off collection accounts: Newer credit scoring models disregard paid collections when calculating your score. Paying off old collections in full won’t remove the account from your credit history but it can minimize negative impacts to your credit scores.
- Pay your bills on time: Payment history is a significant factor in credit scoring. If you’ve struggled with paying on time in the past, commit to doing so moving forward. Consider automating bill payments or setting up due date reminders to avoid additional late payments.
- Consolidate high interest debt: Consolidating credit card debt using a personal loan can help to streamline your payments and potentially save money on interest. It could also reduce your credit utilization ratio, resulting in a credit score boost. Just be sure to compare options if you’re looking for bad credit personal loans, as you may be looking at higher interest rates.
- Dispute credit errors: Federal law allows you to dispute any inaccurate information on your credit reports. If you see a collection account or any other account that you believe is being reported in error, you can dispute it with the credit bureau that’s reporting the information. The credit bureau must investigate and if an error is found, correct it or remove it from your credit history altogether.
Taking one or all of these steps could help you see an improvement in your score over time. You could also explore other ways to raise your score quickly, such as increasing credit limits or paying down some of your debt.
The Bottom Line
Pay for delete sounds like a tempting option for repairing credit score damage but it isn’t guaranteed to be effective. And it may not make sense to pay fees to a credit repair company for things you can do yourself, like paying off collection accounts or disputing credit reporting errors. Remember to check your credit reports regularly to see how much progress you’re making in your efforts to raise your credit score.
Rebecca Lake is a freelance writer specializing in personal finance, credit and debt. She’s a contributor to U.S. News and World Report, Forbes Advisor and The Balance and her work has appeared online at CreditCards.com, MyBankTracker, Money-Rates.com and dozens of other top publications.