Just about everyone who has credit report delinquencies is looking for a strategy to improve their credit scores quickly. “Pay for delete” is one such method that has been making the rounds for at least the past few years.
How does pay for delete work, and should you ask for it? In very limited cases, yes. In most cases, no. And sometimes it doesn’t even matter.
How Does Pay for Delete Work?
Exactly how much depends on the type of collection, the amount owed, and how old the collection is. Pay for delete is essentially a strategy for making collections disappear from your credit report completely.
Pay for delete is basically a negotiation with a creditor or collection agency. They are reporting an unpaid balance on your credit report. You make an offer to pay the balance off if they agree to completely delete the collection entry from your credit report.
Will they agree to do it? Some will.
In fact, a few may even agree to do it if you make a partial payment in lieu of the full balance. This can be especially likely if the collection account is particularly old, and not expected to ever be repaid.
It’s even possible a collection agency will suggest pay for delete as an incentive to get you to make the payment.
As a general rule, you should not agree to this “offer.”
Collection agencies are notorious for making promises they don’t intend to keep, just to get you to make a payment.
The Expected Credit Score Impact
If the creditor or collection agency agrees to the pay for delete strategy, it can immediately improve your credit score. This is the whole purpose of the method – instant credit score gratification.
Under normal circumstances, a collection will remain on your credit report for seven years from the time it became delinquent.
Even if you pay if off completely, the collection entry will remain on your credit report for the full term. But if you manage a successful pay for delete, both the balance due and the derogatory entry will disappear.
Effect on credit
How much will that affect your credit score? It all depends.
Having a collection that’s six months old deleted will have a much greater impact than having one dropped that’s six years old. The balance owed is also a factor. A $5,000 collection will weigh more heavily on your credit score than a $50 collection.
The type of collection it is also matters.
For example, a collection balance due on an auto loan is more significant than a medical collection.
This is because the auto loan collection relates to an unpaid loan. A medical collection relates only to non-payment for a one-time service.
Pay for delete on a $100 medical collection that’s five years old may see your credit score improve by only a few points.
But a deleted auto loan collection for $5,000 could see your score improved by 50 to 100 points.
That’s just a ballpark, there are no guarantees.
How Should You Go About Requesting a Pay for Delete
Before attempting pay for delete you should know and understand that it’s not as easy as it sounds. It’s not a formal process, but an occasional practice that exists mostly in a gray zone.
First, the credit bureaus may not recognize pay for delete – more on that in the next section.
If you can get a creditor or collection agency to agree to pay for delete, which is never guaranteed, you’ll have to go about it very carefully.
In an optimal situation, the collection will be a complete error.
For example, let’s say you have a large medical collection on your credit report.
But it’s reported in error since the balance was in fact paid by your health insurance provider.
By documenting that the bill was paid by your insurance company, not only will the collection balance disappear, but so will the collection entry on your credit report.
But that’s an example of fixing a credit error, and not really pay for delete. In a pure pay for delete situation, you’re asking a collection agency to make a legitimate collection disappear. Not just the balance due, but also the original collection itself.
Your best opportunity to do this will be with collection agencies, and not the original creditor. It’s even more likely to happen with small collection agencies.
The type and age of the debt also matters. A five-year-old medical collection is more likely to work than a two year old unpaid credit card balance.
The steps for a Pay for Delete
If you can get a collection agency to agree to a pay for delete, you’ll need to go through the following steps:
- You’ll have to agree to pay the collection balance in full, unless the agency will accept a reduced payment amount.
- The collection agency must agree to delete the collection entry on your credit report with all three credit bureaus – TransUnion, Experian, and Equifax.
- Before you send any money in payment, the deletion of the collection entry must be agreed to by the collection agency in writing.
- Once payment has been made, you will have to follow up with the credit bureaus to make sure the information has been deleted. You will have to wait at least 30 days.
And even then…
Why Pay for Delete May Not Work
Remember we said pay for delete is a gray area? That’s why the strategy might not work.
A collection agency may agree to your proposal, but they may not necessarily follow through. Their only objective is to receive payment on the collection.
They have no interest or obligation in your efforts at improving your credit score. They may accept the money in payment, then refuse to make the promised adjustments on your credit report, despite their letter acknowledging their willingness to do so.
Your letter will have very little legal weight since it will essentially be a request that the creditor or collection agency do something they’re not supposed to.
Perhaps more important, the credit bureaus themselves may refuse to delete the collection entries. They’ll report the collection as paid, since that, in fact, is what has happened. But they’re unlikely to make the collection entry itself go away.
When creditors work with the credit bureaus, they’re required to report truthful information. A collection agency can report updated information, such as the payoff of an account. And they can report corrected information if the original entry was an error. But they can’t make a derogatory entry go away, at least not in many cases.
Here’s one more important point: Collections are often preceded by delinquent payments. Even if the credit bureaus will remove the collection information, the delinquent pay history will remain.
In the end, the most you may accomplish with a pay to delete effort is having the collection itself paid off. That in itself will improve your credit score. After all, a paid collection is always better than an open one.
Different Credit Scoring Models
There’s one more limitation with pay for delete, and it’s important. Despite the common reference to credit scores as a single number, there are actually many different scores, used by different lenders.
For example, there are at least 10 different FICO scores alone. Some are used for credit card lending, some for auto loans, and others for mortgages. Each is specific to that particular lending industry.
For example, FICO Auto Score 8 will give more weight to your performance on current or previous auto loans, and less to other types of debt.
And while FICO scores are the most common used by lenders, they’re not the only scoring models. One popular alternative is the VantageScore. While some lenders may rely on this score, it functions mostly as an educational score, typically issued through free credit score providers.
Each of the many different credit scoring models available takes a different view of the impact of collections.
What’s more, credit scoring models are not a static situation. New scoring models are being developed all the time.
One example is FICO Score 9. It doesn’t hit you for paid collections, and even gives less weight to unpaid medical collections.
The point is, the credit scoring systems in place are so diverse and complicated that it’s not easy to manipulate them into giving you a higher score. As well, you can never be certain which specific scoring model a particular lender will be using.
Final Thoughts on Pay for Delete
Pay for delete is a fairly complicated process. And that assumes you can get a creditor or collection agency to go along with it. In most cases, you won’t be able to – especially if it’s either a direct lender, like a bank, or a very large collection balance. More reputable companies won’t participate, out of fear of violating their agreements with the credit bureaus.
In the end, your best bet is to try one of two strategies:
- Prove that the collection balance is an error and request that it be deleted, OR
- Pay off the collection, and move on with your life.
One of the big advantages with collection accounts is that they do get better with age. And that happens even more effectively when the account has been paid off.
Forget about pay for delete, and play it straight instead.