Pay For Delete Letters to Remove Delinquent Accounts
A pay for delete letter is a useful tool to try to eliminate a delinquent credit item from your credit report. A pay for delete letter is a means used to arrange for a settlement on a severely delinquent account in which the sender is requesting that the creditor remove the delinquent record in return for paying the account off. The payoff amount can be the full amount or an offer to settle for a lesser amount.
The letter can be used in a variety of situations were the debtor wants to negotiate a payment in exchange for having the tradeline or account history being removed from their credit history. Once a delinquent record is removed, an individual’s credit score should improve almost immediately.
The object of the letter is to get the collection agency or creditor to accept payment in return for an agreement in writing that they will no longer report the debt to the credit reporting agencies.
The collection agency or the original creditor of a bad debt doesn’t have to accept or respond to a pay for delete letter but of they don’t, the individual requesting the settlement and deletion is not in any worse of a position.
The key element in charged off accounts is that a paid charge off has the same impact on a credit score as an unpaid one. Therefore, it behooves someone that has an unpaid delinquent account to try and get the creditor to remove the record in return for payment. Not all creditors will agree to remove a credit history on a delinquent account, however since the account has most likely not been paid in some time, unless the bank, credit card company or medical service provider agrees to delete, there is no incentive for the debtor to pay the account.
As a general rule, these letters are best used with the original creditor and not the collection company. Usually, the collection company cannot make the decision on behalf of the original creditor so they cannot delete the accounts from your record.
Only deal with the creditor that is reporting the debt. If a collection company is calling for debt to another company but isn’t reporting to the credit reporting agencies, ignore them and work with the original creditor instead.
Always be sure to get something in writing that says that the creditor will no longer report the debt to the credit reporting agencies and therefore get a boost in your credit score.
The following is a pay for delete letter as an examples are only that. The letter can be altered to match your specific situation.
Creditor or Collection Agency
1212 Maple St
City, State Zip
Collection Account for Original Creditor Account #
To Whom It May Concern:
This letter is to inform you that the validity of this debt is disputed. In order to compromise, I am willing to pay this account in the amount of $_____ if you agree to delete this account from any and all credit reporting agencies (Equifax, Experian and TransUnion). The purpose of this settlement is merely to have this item removed from my credit files. It is not to be construed as an acknowledgment of liability for this debt in any form.
If you agree to the terms and accept this agreement, certified funds for the settlement amount of $_____ will be sent in exchange for full deletion of all references regarding this account from my credit files and full satisfaction of the debt. Since I am sending certified funds for payment, there shall be no waiting period regarding the deletion of this account from the credit reporting agencies.
If you agree to the above terms, please prepare a letter on your company letterhead agreeing to the same terms as the above settlement offer. It will be implied that this letter shall constitute a legally binding contract, enforceable under the laws of my state.
Your response must be postmarked no later than 15 days from your receipt of this settlement offer or this offer will be withdrawn and I will request full validation of this alleged debt, as provided for by the Fair Debt Collection Practices Act.
Please address all correspondence regarding this account to:
Name
123 Any Street
City, State Zip
This letter can be used and tailored in any situation were you want to negotiate a payment for a tradeline in your credit report being removed. The mention of the term dispute in the letter is protection so as to not willing agree that the terms of the debt are in fact accurate and your full responsibility. A creditor could turn around and use any admission of the actual debt in court if they decided to take legal action.
There is no standard amount to offer the creditor to remove the debt, but there is no reason to offer the full amount initially and offer 50% of the amount owed instead.
Credit and Credit Scores after Bankruptcy
Filing bankruptcy is a series decision that impacts an individual’s credit and credit score for quite some time. Bankruptcy doesn’t have to shut off credit access altogether nor does filing bankruptcy have to be significant detriment for financial success. There are certainly numerous cases of individuals that have filed for bankruptcy and rebounded stronger and gone on to create significant wealth.
A bankruptcy is always one of the biggest negative factors that impact a credit score. How much of an impact it will have on an individual score will depend on the entire credit history and data in the credit report. As time passes, the negative impact of the bankruptcy decreases and the credit score will improve. A credit score can improve significantly faster with a little help and work.
Consumers who file for bankruptcy, file for a variety of reasons ranging from job loss, divorce, medical costs to poor credit decisions. In general, the reason for the bankruptcy doesn’t matter to future lenders and or the credit score calculation. If an individual filed for bankruptcy protection regarding only medical services this would have somewhat of a slighter impact than a bankruptcy that affects all credit. But bankruptcies that only include medial costs are rare and the credit score is going to take a big hit do to the bankruptcy record in most any situation.
The impact to an individual’s scores regarding future credit prospects are the same since most all loan decisions no longer look at qualitative factors such as why an individuals credit is poor rather banks and lenders just numbers such as the credit score and debt ratios, etc…
A credit score takes a big hit from the records of the bankruptcy on the credit report; the impact is different for all cases since the credit history of the individual is different before the bankruptcy. The credit reports of individuals that file bankruptcy often look bad with numerous late payments, collections, and judgments. The credit scores in these cases are already hammered pretty hard before any bankruptcy filing hits the credit report.
After a bankruptcy has been filed, the sooner the individual begins reestablishing credit in good standing, the sooner the credit score will rebound.
For those consumers that have credit available after the bankruptcy, they should keep that credit open. If an individual was able to keep a credit card that was not included in the bankruptcy because there was no balance on it, keeping the line of credit on the credit card open will help rebuild the credit score.
A good start for new credit is to obtain a secured credit card. In may help to even obtain more than one card and continually make monthly payments on time without running up new long term debt. As more time goes by after the bankruptcy the impact of the bankruptcy on the credit score lessens, and it may be possible to apply for a traditional credit card without security.
In general, the derogatory account information reported on a credit report has the most adverse affect on a credit score for the first 24 months after it is recorded. Once an individual is discharged from bankruptcy, they can apply and open new credit whether it’s a bank credit card, retail charge card, gas card and loan.
The nest step after establishing new credit, whether it be on existing accounts or secured credit cards, is to credit any inaccuracies in the credit report that may be holding the credit score down. If an individual finds inaccurate records on accounts that should be removed due to the dates or balances or amount owed, they have the right to dispute these errors. A dispute letter should be sent to each of the credit reporting agencies to correct the errors at Equifax, Experian, and TransUnion no matter how small the error is.
For each of the derogatory records or accounts on a credit report such as collection accounts or judgments or late payments, it is always helpful to check the dates and balances to see if either the amount is wrong on these accounts or to see if the account is past the deadline to remain in the report. Credit scores often have the greatest improvements when expired, derogatory data is removed or inaccurate derogatory data is removed. A key element regarding inaccurate balances is that if the creditor can not validate the amount to the credit reporting agency it has to be removed.
As a final note, always be extra careful not to make any late payments, using new credit responsibly, and don’t apply for too much credit without a purpose. Overtime a credit score will improve as new positive records are posted to the credit report.
The information about bankruptcy is for educational purposes only and is believed to be accurate but is not complete. Freecreditscorehelp.com does not offer legal advice. It is strongly recommended that individuals seek professional legal advice in the event of a bankruptcy filing.
Fed Announces Rule Changes for Marketing Free Credit Reports
The confusion over the marketing of free credit reports by companies that require a subscription to a credit monitoring service or other related products and services to receive the free credit report has resulted in intervention by the Federal Trade Commission.
Numerous consumers have seen advertisements touting free credit reports. Most of these advertisements have small disclaimer that explain that there is a requirement that the consumer sign up for a credit monitoring service or similar service that has a monthly charge in order to receive the free credit report(s).
The primary reason why there is a cost to the consumer over this confusion is that there has been no change regarding a consumer’s ability to receive a free credit report annually from each of the big three credit reporting agencies. Federal law mandated that the big three credit reporting agencies make available one credit report per year, with the no-strings-attached.
With the passage of the 2003 Fair and Accurate Credit Transaction Act (FACTA), all U.S consumers are entitled to one free credit report from each of the three major credit reporting agencies, Equifax, Experian and TransUnion upon request every 12 months. The credit reports are available by mail or at AnnualCreditReport.com or by calling 877-322-8228.
A new rule established by the FTC is designed to restrict procedures and actions that might confuse or mislead consumers as they try to get their federally mandated free annual credit reports and end up paying for an unnecessary service.
The FTC press release regarding the new rule changes states that, starting April 1, advertising for “free credit reports” will require new disclosures to help consumers avoid confusing “free” offers – which often require consumers to spend money on credit monitoring or other products or services.
The Federal Trade Commission’s Free Credit Reports Rule will require prominent disclosures in advertisements for “free credit reports.” The FTC example states that any Web site offering free credit reports must include a disclosure, across the top of each page that mentions free credit reports. The notice will read:
THIS NOTICE IS REQUIRED BY LAW. Read more at FTC.GOV.
You have the right to a free credit report from AnnualCreditReport.com
or 877-322-8228, the ONLY authorized source under federal law.
The Web site must also include a link to AnnualCreditReport.com and FTC.GOV.
The amended rule established by the FTC becomes effective April 1, 2010, except in the case of television and radio advertisements, in which the new rules will take effect on September 1, 2010.
No Credit or Credit Score Same as Bad Credit
Good credit and a good credit score is an important facet of our lives whether it is used to buy a house, for employment screening, purchasing insurance or a whole host of other activities that often require a good credit history. For some consumers though, credit is a burden and they prefer to exercise their use of cash and avoid credit.
Since there are so many actions that require a credit score such as renting a car, purchasing things over the phone or the Internet, and even writing a check having no credit and no credit score can be a burden.
For these consumers, improving their credit score is not the problem, it is simply a matter of obtaining credit in order to have a credit score. If you have no credit history, you have no track record of payment and you most likely will not have a credit score. The unfortunate aspect of having no credit history and no credit score is that consumer is considered a credit risk.
Lenders use credit scores to help them determine whether someone is an acceptable credit risk for new credit or whether a creditor will increase or decrease an existing line of credit or even the likelihood that a customer will file for bankruptcy. Creditors are reviewing a credit profile to see a history of how that consumer handles debt. The review of an individual’s credit history may involve reviewing total outstanding debts, minimum monthly payments, even account credit limits. If there is no credit history and no credit score upon which to make a decision, a decision to extend credit is regarded as a risk by most lenders and creditors.
In fact, the automated underwriting approval systems developed by FNMA and FHLMC used for the vast majority of home loan approvals will not approve a loan request in which the borrower does not have a credit score.
There are some things you can do to improve your credit even when your financial situation has turned sour and there are ways to build a credit profile and credit score when there is no credit score to start with. The first issue someone may have when there is no credit score compiled with their credit report, may be that there is a mistake on their credit report.
Credit scores are dependent on the credit reporting agency that the score is based on. The three major credit reporting agencies in the US are Trans Union, Experian and Equifax. Each one of these credit reporting agencies will have a different score for the same consumer since the data in each of the three different credit reporting agencies on which the score is based will generally have slightly different information.
If a consumer finds they do not have a credit score it may be the result of the score being based on data from just one credit reporting agency. It may be that credit histories for accounts paid on time are missing from this credit report or is only recorded in one or two credit reports.
For credit histories that are only in one of the credit reporting agencies files, ask the other agencies to add the data. Send a copy of the statement and the credit report that includes all of the accounts if you can.
If it appears more than one credit report or all of the big three credit agencies are missing accounts that are paid on time, ask the credit reporting agency that these accounts be added to the report. Send the credit bureaus a recent account statement and copies of canceled checks if needed, reflecting the account and payment history. The credit bureau doesn’t have to add account information, but if it is a verifiable account they often will add the data.
A final step is to quickly develop a credit history. A credit card is one of the fastest and easiest methods to build a credit history. Credit cards can be obtained for consumers that have no credit and previous bad credit. Some secure credit cards come with a guaranteed approval with just minimal conditions, none of which include credit verification. It is important to use the credit card to obtain a payment history, though the payments can be made within the grace period to avoid finance charges. A good resource to review competitive credit card offers is www.bestcreditcardrates.com.
Other loans such as secured loans at a bank, major department store credit cards even certain utility bills will work to establish a credit history as long as the bank or utility company reports the accounts to the credit bureaus.
The Big 3 Credit Reporting Agencies
A credit reporting agency is a repository of information that holds an individual’s credit or payment history. An individual’s credit report is created when a request for a report by a lender, credit card company or other authorized party requests it. Credit bureaus or credit reporting agencies hold the consumer’s credit data in their databases. The data is always there but the credit report does not really exist until it is asked for. It is then compiled by the credit reporting agency based on the information stored in the credit reporting agency’s file.
Information in a credit report is supplied by lenders, from court records, credit card companies, banks, mortgage companies and other creditors including the individual to create an in-depth credit report. A credit reporting agency or credit bureau collects and reports the credit information from these sources and retains the data until called for. An individual’s credit history is compiled and maintained by these credit reporting agencies as needed following their procedures and legal guidelines. The information held in the report is also used to calculate an individual’s credit score best a computer scoring model at the credit reporting agency.
There are three big national credit reporting agencies in the United States. Experian, TransUnion and Equifax are the three biggest credit reporting agencies. They are not the only credit reporting agencies in the United States but they are the biggest by a considerable degree. There are many smaller, regional and even industry specific credit reporting agencies that provide clients with credit reports. There are also many different international credit reporting agencies that operate in specific regions.
These big credit reporting agencies are the ones in which most of the attention about credit reports and credit scores is focused on because they maintain the largest national databases of consumer credit information. The big three credit reporting agencies perform two similar basic services: collecting and reporting credit information.
The three credit reporting agencies are independent of one another and though they conduct their business of data gathering to compile credit reports in a similar fashion they do not operate in the same way. This is the primary reason why consumers who obtain a credit report from the three largest credit reporting agencies get a report back with some different data. Therefore, a credit report from Experian will contain slightly different information than a credit report from TransUnion and Equifax. Not every creditor and lending institution such as credit card companies, banks or mortgage lenders report to all three credit bureaus, leading to additional difference between the three big credit reporting companies.
The majority of the credit data supplied to a credit reporting company is on a voluntary basis. A credit card company or lender can choose to supply the data or simply not choose to be burdened with the responsibility of supplying data files on their customers to the credit agencies. A common example of this is small and regional credit unions. It is likely that loans and credit accounts from these entities will not be found in a credit report. However, thousands of creditors, lenders and other businesses do send credit information and updates to each of the credit reporting agencies, frequently once a month.
The lending institutions and other creditors that do not supply information, send updated consumer credit information to one or more of the big three credit reporting agencies. The information often includes how much the consumer owes at that institution, the original amount of money extended, when the account was opened and the payment history. The same lending institutions and creditors that supply information to credit reporting agencies may also be the ones requesting credit reports when a consumer applies for credit.
The three credit reporting agencies also review public records for information, such as court records from bankruptcies, foreclosures and legal judgments. Information retained also includes recorded information about credit applications and credit inquiries.
TransUnion, Experian and Equifax now market their credit reports directly to consumers, in addition to its primary business of providing the reports to potential creditors. The big three credit reporting agencies can be contacted at the following numbers. Please note, in order to get your free credit report you want to go to annualcreditreport.com or call 877-322-8228. All of the services performed by the big three offered directly to the consumer are fee based.
Equifax, Inc. is a consumer credit reporting agency that is one of the big three credit reporting agencies. The company was founded in 1899 and is the oldest of the three agencies. Equifax is based in Atlanta, Georgia.
For general information and to order a credit report or score directly from Equifax you can contact the company at:
www.equifax.com
800-685-1111
P.O. Box 740241, Atlanta, GA 30374
Experian is a consumer credit reporting agency, also part of the big three credit reporting companies.
General information and credit report order information can be obtained at:
www.experian.com
888-EXPERIAN (888-397-3742)
P.O. Box 2002, Allen TX 75013
TransUnion is a consumer credit reporting agency, considered one of the big three agencies. TransUnion was created in 1968 and is based in Chicago, Illinois.
General information and to order credit report and score:
www.transunion.com
800-888-4213
P.O. Box 1000, Chester, PA 19022