Collection Agencies –

Always remember you can negotiate with collection agencies in an attempt to have items removed entirely or reported unfavorably on your credit report.  Collection agencies do not get paid until it collets money from your pockets.  This can be to your advantage.

Don’t contact your creditors to begin negotiating until you are in a position to pay the amount owed.  Your goal is to pay a portion of what is owed, but if you have money in your hands you can negotiate more effectively with them.  Just a note, it’s difficult to negotiate with a collection agency if all you have to offer is a payment plan.  This gives them the advantage.  If you have the full amount owed, you have a better advantage point when it comes to negotiating a settlement.  For an example, if you owe 500 dollars and the account is three years old and will not come off for another four years.  Contact the collection agency and explain that you really want to get this off your credit report.  Don’t tell them you have a timeline, like buying a house or a car and need this taken off first.  State to them you have only 300 dollars to pay them.  This will give you negotiating power to get them to remove the credit delinquency by tangling the full amount due.  Collection agencies won’t accept your first offer, but come to an agreement that makes sure they remove the collections debt of all three bureaus.  Be sure to get it in writing that they will remove it.

The collection bureau only puts in your file what the collection agencies or credit grantor (banks, credit card companies) reports.  The bureau, like you, is working against the seven year clock, when the debt by law, must be removed from the file.  So if you are near the seven year timeline bring that as a factor in negotiating.  It benefits the collection agency to collect some money, instead of nothing.  The benefit to you is you feel good, because you paid off the debt and your credit file is now clean.  It may take more than one negotiating session to accomplish this, so being patient is the key.

When talking to the collection agency, don’t give them any information other than you are willing to pay the debt and you want it removed from your file.  Never argue with these people.   Just tell them you want to repay the debt.  You will deal with people at the collection agencies that are negative or stressed out (they always are dealing with people down on their luck and owe money all day long).  The first response you will get from them is “we can’t do that,” or “we don’t have the authority to do this.”  In response, kindly let them know they can do it if they want get paid ASAP.  You may have to go to a manager or a person who does have the authority to negotiate a change in your credit file.  Awhile may pass for before they take your offer.  In the meantime, send a letter and make calls a month later.  Don’t give up.  That is what they want you to do.  Persistence does pay off.

When talking to the collections agencies they will probably insist on the full amount owing.  You can pay the entire amount with the agreement that the information be deleted from you credit file, which is ultimately your goal or you can continue to negotiate on your next phone call or letter.

If you have a paid collection on your credit file that is at least 18 months old; dispute the entry.  The odds of the collection agencies or lending institution having immediate access to an old record is slim and they don’t want to waste time on an old record that is paid off, they want to get paid on the next outstanding account instead.

If you want to go ahead and pay the collection, because you are tired of all the negotiations, you will probably get a commitment of an entry for a paid collection on your credit report.  You can accept it now, but in 60 to 90 days you can dispute the entry by asking again for a new investigation.  Make sure you tell them it was to your understanding they would have the entry removed when you paid it off.

Grantors (Banks) –

If negotiations break down between you and the collection agency, you can contact the business that you actually owed the debt to (credit card company, public utilities, hospitals, department sores, etc.) and negotiate with them to pay in the same fashion as above.  Like above, if the debt is to be paid by you, ask them if they will agree to stop reporting the debt to the collection agency and have the debt removed from your credit file.  If an agreement can be reached over the telephone, before you pay anything, you can request that a letter be sent to you verifying your agreement.

All the steps with the collection agency used above, use with credit grantors but stay nice, polite, and civil when having any type of conversation.  If after all your calls and letters with the banks and agencies don’t pay off, you can go ahead and pay off the debt.  The collection will show you have paid it and then have another investigation to review the dispute and have of course the negative remark removed from you credit file.

Please Note:

During negotiations you must keep in mind what you want to accomplish.  You want to have your credit reported positively and have removal of negative entries.  You will not accept an entry of paid collections, paid charge-offs and paid lates.  What you want is an entry of paid satisfactory and as agreed, credit line closed.  Stay on track and you will accomplish your goal of GREAT CREDIT!