Remove Collections Account Without Hurting Your Credit Score

Remove Collections Account Without Hurting Your Credit Score

Written by Caitlin Wood
Last Updated July 19, 2022

A single incident, like an account in collections, can do damage to your scores without you even being aware of it. Unfortunately, this happens all too often as it is very easy to simply ignore or forget about issues with your credit. Perhaps you closed a credit card account that still had a couple of charges pending or maybe you weren’t able to keep up with loan payments. If you have an account in collections and want it removed from your credit reports, keep reading. 

How To Remove A Collections Account From A Credit Report

Getting a collections account off of your credit report may sound like an insurmountable problem, but it can be done. Below are a few tips:

1. Determine If The Account In Collections Is Legitimate

The first step to getting a collections account removed from your report is to see what you’re dealing with. It’s not uncommon to get a collections notice in the mail or receive a phone call and not know what the charge is all about. Getting a copy of your credit report can let you know who says you owe them money without a lot of stressful back-and-forth telephone conversations.

You can obtain a copy of your credit report for free from Equifax Canada and TransUnion Canada. You can access your Equifax credit report and score by creating an account online or by requesting a copy by mail, both of which are free. TransUnion, on the other hand, provides consumers with their Consumer Disclosure for free. You can request a copy in person, by mail or by creating an account online.

2. Challenge The Collection Agency, If Illegitimate 

If you feel that the claim by the collection agency is invalid, you can challenge the charge and request that it be removed from your credit report. The first step is to send the collection agency a debt validation letter. This doesn’t have to be fancy. Basically, you want to ask the collection company for the following information:

  • The name and contact information of the original creditor
  • A detailed accounting of the balance owed
  • Proof that the statute of limitations in your province hasn’t expired

3. Or, Negotiate To Have It Removed If Legitimate

If you feel the claim by the collection agency is valid after reviewing it and you realize that the charge is something that you owe, there are two main ways to mitigate the damage to your credit report. 

  • Pay off the debt in exchange for removal – You can request that the debt collection agency removes the collections entry from your report in exchange for you paying off the debt in full. Collectors are not required to do this and their acceptance will depend on a number of factors, including the amount, the age, and your history with the account.
  • Negotiate a lower price for removal – If you don’t have the full amount available to pay off your debt, you can try to negotiate with your collection agency. This is called a debt settlement, which you can hire a professional or do yourself. You’ll ask to pay a smaller amount than you owe and the collections agency will mark your debt as paid. 

4. Consider Waiting For It To Fall Off Your Reports

Information does not stay on your credit reports indefinitely, there are specific times lines for different types of information. Specifically, whether the information is positive or negative. Both Equifax and TransUnion keep collections on credit reports for 6 years. If your debt is close to that age, it might be your best option to simply leave it there until it drops off. 

How To Check Your Credit Reports For Collections

Checking your credit reports (you have two, one from each credit reporting bureau) at least once a year should be a financial habit that all credit users have. Both Equifax and TransUnion allow consumers to access their reports for free online or via the mail. Once you receive your reports, you can review them for accounts in collections, these accounts will have a numbered rating of 9

When reviewing these accounts make sure you verify the following information:

  • The amount owed
  • The name of the lender or creditor
  • The name of the debt collection agency (if indicated)
  • How many payments you’re behind

Why Is My Account In Collections Not Showing Up On My Credit Report?

There can be multiple reasons why your account in collections is not showing up on your credit report. Below are some potential reasons: 

  • Past The Statute of Limitations – Accounts in collections disappear from your credit reports after 6 years. 
  • System Error –  Sometimes technological errors or glitches can cause disturbances to your credit report. These are typically temporary and your collections account will likely reappear. 
  • It’s In Transition – If your debt was recently sold to a collection agency, it may be in the transitionary period where the debt is being moved from the original creditor to the collection agency. 
  • It’s Paid Off – If you or a loved one has paid off your collections account, the account will not disappear but may look different. It should appear as “satisfied”. 

Frequently Asked Questions

How long does a collections account stay on my credit report?

Accounts that end up in collections stay on your credit report for 6 years after your last payment. If you pay off your account in collections, it will still stay on your report for 6 years after your repayment, however, it may have less of an impact on your credit scores. 

What is a goodwill deletion letter? 

A goodwill letter is a written request to your lender, creditor or collection agency to remove a negative remark on your credit report. There’s no guarantee that they will oblige your request, however, it doesn’t hurt to ask. If there is an error and your account doesn’t belong in collections, you can file a dispute with the credit bureaus. 

Will my credit score increase if I remove a collections account on my credit report? 

Your credit scores may improve if your remove a collections account from your credit report. How much your credit scores are affected depends on the credit scoring model used, how old your collections account was and the overall health of your credit. 

How long does it take for my credit score to be updated after paying off my account in collections? 

Collection agencies do report to the credit bureaus, so your credit scores will be updated after the collection agency reports the information to the credit bureaus. 

Bottom Line

If you missed multiple payments and your account is in collections for legitimate reasons, then you’re unlikely to be able to remove it from your credit report. However, you can always pay off the account in order to help mitigate the effect it may have on your credit. On the other hand, if your account has ended up in collections due to an error, be sure to have it rectified by filing a dispute with the credit bureaus. 

Rating of 4/5 based on 22 votes.

Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

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