Pay for Delete: What It Is and Whether It’s Worth It

How to improve credit score

Mini Saha

March 21, 2022
Pay for Delete

Do you know what pay for delete is, whether it’s legal and worth your time and money? Catch up on it all in this blog.

What is pay for delete?

Pay for delete is when you make an offer to the debt collector stating that you’ll pay off the account in exchange for getting it removed from your credit report. 

This option is only available to you for the debts you still haven’t paid for since it requires an outstanding balance that you can use as leverage. You’ll need to send a goodwill letter if you want to get any late payments or negative remarks removed for an account you’ve already paid.

This practice isn’t totally aboveboard. Debt collectors are obligated to provide accurate and complete information when reporting to credit reporting agencies, so pay for delete can be a gray area.

Furthermore, the latest scoring models are beginning to make this practice irrelevant.

Does pay for delete work?

Well, sometimes pay for delete works, but you shouldn’t count on it. Why? Because the process entails removing accurate information (legitimate negative items) from your credit report, which undermines the integrity of credit reporting.

The credit bureaus have taken steps to discourage pay for delete, which includes emphasizing in their service guidelines that all the information reported to them must be complete and accurate. Hence, several debt collection agencies avoid engaging in pay for delete.

Regardless, pay for delete can still work for you depending on your circumstances and who you are negotiating with. You may have better luck when you send a pay for delete letter to a debt collection agency instead of your original creditor.

Pay for delete tends to work best on older debts that you are less likely to pay otherwise. Also, they are likely to have already been sold to debt collectors. You’ll also have a better chance if your debt is relatively large, and the reason is obvious. Debt collectors are more interested in having larger debts paid off first.

Is it still worth it?

For now, yes, but it will change in the future. Pay for delete is rapidly becoming obsolete. The VantageScore 3.0 and 4.0 ignore paid collection accounts, which the new FICO 9 model does as well. 

In these models, the collection accounts remain on your credit report even after you pay them off, but doing so is enough to stop them from bringing your credit score down. Essentially, removing them doesn’t truly benefit your score.

Remember, not all lenders use these models yet. In fact, FICO 8 remains the most widely used scoring model.

Four steps to negotiate pay for delete.

Step 1: Figure out who owns your debt

First, you need to contact your creditor and find out if they’ve sold your debt to a collection agency. If yes, you’ll have to negotiate with the debt collectors.

If your creditor still owns the debt, you’ll need to discuss a repayment plan with them and about removing the debt’s negative remarks on your credit report.

Step 2: Send a pay for delete letter

Explain why you couldn’t make payments on time in your letter to your original creditor. This is especially important if circumstances were out of your control that led to the delinquent account. If you have a strong payment history, point that out as well. 

Step 3: Get the agreement in writing

If the debt collection agency or your creditor accepts your pay for delete request, make payments only after getting a written confirmation.

Step 4: Check your credit report

The last and most important step is to verify if pay for delete has worked for you by checking your updated credit report. Also, make sure the collection account has been removed.

Keep monitoring your credit report because even if your creditor or collection agency removes your collection account, they might add it back later as a paid collection account. If this happens, notify the debt collection agency that they are in breach of their contract with you for not completely removing the collection from your credit report.

Is pay for delete a legal deal?

It isn’t entirely legal or strictly illegal. Under the Fair Credit Reporting Act (FCRA), data furnishers like creditors and debt collection agencies must report only fair and accurate information. 

When a lender or creditor deletes a legitimate debt they had already reported, it is ambiguous whether they are declining to report a debt (is legal) or failing to provide complete and accurate information (is illegal).

Takeaway

Credit reporting agencies strongly discourage any attempts to remove accurate information from your credit report. Moreover, pay for deletion is becoming outdated.

Most collections accounts can linger on your credit report for up to seven years from the time the debt originally became delinquent, so they will still appear on your credit report as paid collections. Pay for delete won’t remove the negative information reported by the original creditor, such as late payments, from your credit report.

To get any credit-related help and find the best solution, visit www.coolcredit.com.

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