“Pay for delete” is an agreement between a debtor and a debt collector, in which the debt collector promises to remove negative information from the debtor’s credit report in exchange for a payment. This type of agreement may sound tempting, but it's also a bit sketchy because it's in a legal gray area. There is no guarantee the negative information will be removed from your credit report, and there’s ultimately no amount you can pay — other than what you owe, which helps only to a certain extent — to improve your credit score.
How Pay for Delete Works
With a pay-for-delete agreement, you typically send a letter to the debt collector asking for the negative remarks to be removed from your credit report in exchange for a payment. Then, you need to make the payment and confirm the negative information gets removed from your credit report. We’ll go through the steps below.
- Send a pay-for-delete letter. A pay-for-delete letter is a request you send to a collection agency saying that you are willing to make a payment on your debt if they agree to remove the negative information regarding the debt from your credit report.
- The debt collector agrees. The debt collector agrees to your request, and you settle on an amount that you will pay. You then follow through with making the payment.
- Verify the negative information has been removed. Once you have made the payment, check to see if the debt collector held up their end of the deal and removed the information from your credit report. Note that even after you have made a payment, the credit bureaus may keep certain negative information on your credit report if it is accurate, as accurate information should not be removed from your credit report.
How to Write a Pay-for-Delete Letter
To write a pay-for-delete letter, you will need to include your personal details and specific information about the negative item you want removed from your credit report. The key items to include in the letter are:
- Your personal information: Include your name, address, and contact details.
- Account details: Include your account number, the balance owed, and any other identifying information to help them locate your account.
- Proposed terms: State how much you are willing to pay in exchange for the negative information you want removed from your credit report.
- Response deadline: Give the debt collector a deadline for them to submit their response. You should stress that you want their response in writing.
How to Negotiate Pay for Delete Over the Phone
To negotiate a pay-for-delete agreement over the phone, contact the debt collector and provide them with the same information you would include in a pay-for-delete letter, such as your personal information, your account number, and the amount you are willing to pay in exchange for the negative information you want removed. It’s important to get any agreement reached over the phone in writing.
Why Pay for Delete Doesn’t Work
Pay for delete doesn’t work in most cases. There’s no guarantee that the negative information will be removed from your credit report, even after you make a payment. The credit bureaus, debt collectors, and your creditors and lenders have a say in what is on your credit report, but are discouraged from deleting accurate information from your credit report due to the Fair Credit Reporting Act. Some creditors and debt collection agencies don’t even offer pay-for-delete agreements for this reason.
When it comes to debt collection, and ultimately what’s listed on your credit report, there are some important things to keep in mind.
Pay for Delete vs. Paid in Full: Classification Matters
In return for full or partial payment, debt collectors sometimes promise to change how a collection account is classified on your credit reports. And this classification does matter. For example, there is a big difference between a collection account that is characterized as “Outstanding” and one that is labeled “Paid in Full.” Your score will continue to suffer with the first designation, whereas the latter could help prevent further damage.
Given that your creditor or debt collector can influence your account’s status with the information that it reports to the credit bureaus, this can become a bargaining chip in debt negotiations. But the “Paid in Full” classification is not worth paying extra for. As long as you satisfy your obligation and manage credit responsibly moving forward, your credit standing will take care of itself.
Accurate Negative Information Cannot Be Removed
Some people mistake pay-for-delete agreements as an opportunity to completely remove a problematic account from their credit reports. But once a negative record finds its way onto your credit report, it can only be removed if it’s proved to be inaccurate or once seven to 10 years have passed.
Does Pay for Delete Increase Your Credit Score?
A pay-for-delete agreement can increase your credit score if the negative information is removed from your credit report. However, that is easier said than done since accurate negative information cannot be removed from your credit report.
The good news is you don’t need a pay-for-delete agreement to improve your credit score. For example, the newest credit scoring models, such as VantageScore 3.0 and 4.0 as well as FICO Score 9 and 10, ignore paid collections. So, all you need to do is pay your debts, and you will eventually see your credit score improve.
Learn more about how long it will take to improve your credit score.
Pay for Delete Offered by Credit Repair Companies
Credit repair companies may offer this option to people who are desperate for a credit-report makeover yet unaware of how credit improvement really works. For example, they might tell you a small up-front payment is all that’s standing between you and a clean credit report. But they don’t actually have the power to make that happen.
Credit repair companies can’t simply delete records from your reports. So, if credit-repair services do anything, they’ll merely take the same basic steps that are available to consumers for free. This includes disputing mistakes on your credit reports, attempting to suppress fraudulent credit information, and perhaps negotiating settlements for unpaid debts. None of that is worth paying for, especially because it would involve sharing your personal information with an untrustworthy company.
Is Pay for Delete Legal?
Pay for delete is in a legal gray area since it is not technically banned but also not completely in line with the Fair Credit Reporting Act. The Fair Credit Reporting Act requires accurate information to be recorded in your credit report. Therefore, removing accurate negative information from your credit report is discouraged and does not fully adhere to the FCRA. You can learn more about the laws that apply to pay for delete below.
Pay-For-Delete Rules & Regulations
Lenders, debt collectors, and credit bureaus are all closely regulated at the federal and state levels. That means you have certain rights as a consumer as well as a means for recourse if an organization acts abusively.
The following are some of the most notable rules backing you up:
- Credit Repair Organizations Act (CROA): This law requires credit repair organizations to provide a written summary of your rights and a written contract that you can void within three days of signing. They must also accurately disclose what services they can and cannot perform. And they are prohibited from requiring payment before promised services are completed.
- Fair Credit Reporting Act (FCRA): The FCRA gives you the right to know when information on your credit report causes you to be denied for credit, insurance, or employment. It also enables you to dispute credit report inaccuracies, while requiring credit bureaus to remove inaccurate, incomplete, or unverifiable information from your files. And those are just a few of its important provisions.
- Local Laws: A variety of state and local consumer protection laws apply to credit repair companies and debt collectors that operate within a small geographic area.
For more information, you can check out our credit card and credit report bills of rights.
If you believe that you are the victim of a credit-repair scam, you should check out our tips for spotting scams and also make sure to submit a complaint to the Federal Trade Commission.
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