The Credit Repair Death of Pay For Delete to Remove Old Bad Credit
Posted November 2, 2016
It's coming. Big changes are in the works for consumers with old bad debts owned by debt buyers. Sources inside the debt buyer and debt collection industry are secretly making positive changes about reporting old accounts. These changes will help consumers with old delinquent accounts find a light at the end of the credit reporting tunnel.
Up till now most people have old delinquent items reported for seven years from the time an account last went delinquent. This means even if someone paid an old item it would sit on the credit report for all that time. That strategy kind of removes the motivation or benefit for paying off and old delinquent account, so historically people directed their money towards credit repair firms in hopes they could get accurate but negative accounts removed.
This created a cottage industry among credit repair and some consumer forums proclaiming that it was routinely possible to convince a debt collection company or bad debt buyer to remove an account from a credit report if it was paid. I get a basket full of people who contact me on a weekly basis who want to try to convince me pay for delete is a generally accepted strategy. It's not.
Pay to Delete - More of a Myth Than Reality
There is no doubt that some less reputable agencies will remove an old account from reporting to a credit reporting agency if an old balance is paid but for the larger company it just is not possible. The contractual relationship between credit reporting companies like Experian, Equifax, and TransUnion prohibits the pay to delete strategy. For more information just hunt down the inside guide to the Metro 2 credit reporting. The guidance is clear that, "In order to maintain the integrity of credit information, it is important that credit grantors not ask for a subsequent deletion of account history unless an actual error was reported. Paid derogatory accounts, such as collections, should be reported as paid; they should not be deleted." And when it came to third party collection agencies, debt purchasers, or factoring companies the rules in the Metro 2 credit reporting format were clear, "Do not delete paid in full collection accounts."
Well while you were sleeping the entire pay to delete or pay for delete effort began to go away. In fact millions of consumers have already received the benefit of having old accounts removed early off their credit report, they just don't know it yet.
Silently starting in October 2016 some debt buyers began shaving five years off reporting on consumer credit reports. The new policy removes an old delinquent account now after two years since the last delinquency started if the collection account is paid or settled and now has a $0 balance. Let's be clear here, this is not a pay for delete strategy. This is an early removal policy following the payment or settlement on an old account.
This change will surely ripple out to more across the debt buying and debt collection industry and along with less reporting of non-federal debt on credit reports, people in general should start to see improvements in their credit reports without paying anyone for credit repair or doing anything.
I predict by this time next year I will have to revise my How to Easily Rebuild and Repair Your Credit guide and start suggesting that people should specifically ask the debt buyer about their policy of removing old accounts early.