Should You Pay That Collection?
Not sure whether or not you should pay a collection? We want to help.
Before we jump in, it’s important to reference earlier blog posts about how to investigate and validate a collection with the credit bureaus and the debt collector. If you’ve completed that process, then now is the time to decide whether or not to pay that collection.
Let’s start with a few questions…
First, what type of collection is it?
If it’s a medical collection, the credit bureaus require that paid medical collections have to be removed from a consumer’s credit report.
If it’s not a medical collection, the creditor will decide whether they will remove the collection upon payment, as it is not required by the credit bureaus or the government.
Second, how old is the collection?
Paying a new collection will have less of an impact on your credit health than paying a collection that is 5 years old.
Third, do you legitimately owe the debt?
If you know you owe the money, the right thing to do is to pay the debt. Just be aware that paying a collection can negatively impact your credit health if it is not removed from the credit report.
If you don’t owe the debt, go back to the process of investigating and validating the collection with the credit bureaus and the creditor.
If you’ve decided you want to pay the collection, here is a simple strategy to use to increase the likelihood of getting the debt removed from your credit report upon payment.
Start with the outcome first. When negotiating a debt, seek to negotiate the removal of the collection before negotiating the balance. Always ask for the account to be removed from the credit report, and when you can expect to see it removed during the negotiation.
Once you are able to secure the removal of the account from the credit report, seek to lower the balance owed. In certain instances, it’s better to pay the full amount to remove the account from the report than to pay a settled amount, but having to deal with that collection for another 7+ years.
If you’re not sure what to do, consider scheduling a Free Credit Evaluation to discuss your options. Through our unique suite of services and products, we may be able to assist you with resolving credit challenges to reach your credit goals.
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