What Is Pay To Delete?


If you have debt, then I’m probably preaching to the choir when I say how much of a drain it can be on our lives. So much so that it’s almost too easy to fall prey to get rid of debt quick schemes such as debt settlement and credit cleanup products.

Yes, there are occasions in which debt settlement and similar services can work. But more often than not the companies who tout these services are predatory and the results costly – costly in both your budget and your credit score.

The truth is, there’s no such thing as a quick fix for debt. Resolving financial issues takes time, knowledge, and diligence. Anyone who tells you otherwise is likely trying to sell you a predatory product. And the same goes with some of the financial advice we can run across when researching our options.

One such piece of dangerous advice is to use “Pay to Delete” to get rid of items in collections on your credit report. The idea behind Pay to Delete is to pay a collections agency so that they’ll mark delinquent items as paid off and lobby to have them removed from your credit report entirely (as though it never happened). The question is, does it really work?

What is “Pay to Delete”

When a delinquent account gets sent to a collections agency, your credit score takes an immediate hit that will last for years. Even if you contact the collections agency and pay off the debt, that doesn’t remove this item from your credit report.

At first glance, this seems pretty unfair. If you’ve paid the debt off, why should it continue to harm your credit? Basically, it’s because potential lenders want to have a whole picture of your credit history; and accounts that went to collections, even if they are now paid off, are a big red flag.

That’s where “Pay to Delete” comes in. How it works is you would agree to pay off the amount due and ask the collections agency to ask the credit reporting bureaus to remove the item from your credit report. It all sounds great, accept for the fact that this goes directly against the policies of the credit reporting bureaus.

Your perspective: The item in collections gets removed from your report and it can no longer bring your credit score down.

The collections agency’s take: Knowing the benefit to you, collections agencies may agree to do this since it may incentivize you to pay off the debt faster. However, since this goes against the service agreements they have with credit reporting bureaus, they could lose their accounts with the credit reporting bureaus for even trying.

The credit reporting bureaus’ take: Removing items that have gone to collection from your report before their allotted amount of time could be misleading to lenders.

How Pay to Delete Works, in Theory

While pay to delete doesn’t often work, it may be tempting to try. If you were to do a Google search of “pay to delete” right now, you’d find a multitude of sample letters that you can send to your collections agency. However, credit expert John Ulzheimer says it’s best to call your collection agency instead.

“‘Psychologically, the way collectors look at letters is, if you took that much time to formally approach them, they know you really care, that you really desire resolution’ he says. ‘Their job is to collect as much money as possible from you, so they’re going to take advantage of that psychology.’”

In other words, writing a formal letter is the equivalent of trying too hard, making the collections agency think you’re desperate.

Another thing to keep in mind is that some collections agents may resort to dishonest tactics to try to convince you to pay your debt off faster. In this case, that could include agreeing to a pay to delete arrangement without actually having the intention of fulfilling their end of the bargain. If your collections agency agrees to do this, make sure you get the agreement in writing.

If you get this far, the collections agency will likely try to dispute the item with the credit reporting bureau so that it will be removed from your report. Since the credit reporting bureaus directly forbid the practice of pay to delete, disputing the item is often the only way a collections agency can get the item removed.

Alternatives to Pay to Delete

While pay to delete isn’t illegal, it can definitely be uncommon thanks to the restrictions we’ve already discussed. If you try this method and hit a wall, keep in mind that there are other ways to repair your credit score, albeit not as speedy as a deletion of a past delinquent account.

How to fix your credit score if there’s an error on your credit report.

First things first, if the item in question isn’t something you actually owe, then you should absolutely NOT do pay to delete. In fact, you shouldn’t pay for a debt that isn’t yours at all. Anytime you spot an error on your credit report, start the dispute process immediately. This can be a time-consuming ordeal so it’s best to deal with it head on as soon as you know about it.

If the error is an instance of fraud, then you’ll want to take even more care to fix your credit report and protect your identity. Besides disputing the item in question, set up a fraud alert so further attempts to obtain credit in your name will be thwarted.

How to fix your credit score if the delinquent item is valid.

If you actually do owe the debt in question, then the best thing to do is pay it off as soon as possible. While that’s easier said than done, you do have options – one of which is to settle the debt with the collections company so you can pay the amount off with the money you have available now.

Once the debt is paid off, you could try sending your collections agent a goodwill letter asking them to stop reporting negative items about you to the credit reporting bureaus or to remove past reported items. Like pay to delete, this is not likely to work, but worth a try.

The next step is to remember that there are multiple factors that weigh into your credit score, which means you can work on other strategies to improve your credit score (even if you still have debt to pay off). Even simple things like paying on time on your bills from now on can make a big difference over time. While negative items like a collections item can live on your credit report for several years, it only takes six months to one year of perfect payment behavior to start seeing your score tick up.

Don’t Get Too Hung Up on Your Credit Score

Also easier said than done, I encourage you not to get too hung up on your credit score. As important as it is to have as high of a score as possible, obsessing over it is only going to lead to anxiety which could get in the way of improving your financial situation. So the next time you see your score, remember these two things:

  1. There’s no such thing as a perfect credit score

  2. We all have more than one credit score. In fact, we have as high as 40 or more!

Since there’s nothing any of us can do to achieve a perfect credit score – and we all have more credit scores than we can even see (which vary A LOT in range) – then there’s no reason to even strive for achieving credit score perfection. Instead, do this:

  1. From now on, pay all of your bills on time.

  2. If you can’t pay something on time, contact your lenders and work out a payment plan so you don’t have further negative reports going to your score.

There’s another bright side to keep in mind: the new VantageScore model (which is the credit score we show you on ReadyForZero PLUS Credit) ignores all collections that don’t have a balance. So that means there’s at least one credit score model that won’t penalize you for having debt go to collections, as long as you pay it off.

So don’t be discouraged by an item in collections or a lower than preferred credit score! When it comes to improve your finances, slow and steady wins the race. Keep working each month to improve your situation and you will see positive results!

Image Credit: Mixy Lorenzo

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