Debt Collection Tactics
Having a debt collection entry can be detrimental to your credit score. A collection is a severely past due account that will make it hard for you to get approved for new credit and loans. This is especially true for more recent collections. You can improve your credit score by deleting these collection accounts from your report or changing the status to “Paid” or “Current.”
Before you pay off a collection account, you should negotiate with the debt collector to have your credit report updated to something favorable. The only intolerable scenario is to pay the collection without having that fact reflected in your credit report.
Negotiate with the debt collector to have the account deleted from your credit report in exchange for payment. Send a written request (a pay for delete letter) to the collector offering a settlement payment if the collector deletes the account from your credit reports. Wait for a written response from the collector before coursing any action.
Another option is to call the collector on the phone to negotiate pay for delete. However, you risk inadvertently saying something to the collector that communicates responsibility or liability for the debt. You want to stay away from this if you are beyond or nearing expiration of the statute of limitations. Even if you decide to negotiate by phone, you still have to have the agreement in writing. Have the collector mail or fax you a letter including the conditions of the agreement before making a payment.
Ideally, you want the entry completely taken off of your credit report. Unfortunately, not all collectors are prepared to do this even in exchange for payment. If you cannot have the entry completely detached, you should have it updated as “Paid in full.” Offer the collector a settlement payment some percentage less than the full amount owed. The agreement should be in writing.