One of the main reasons your credit repair will fail, you didn’t settle your collections.
Some credit repair companies mislead the public and telling them to not pay their debts, they’ll get them off the report no problem.
The reason why this fails is because collection companies have a vested interest in keeping the negative account on your report. This reporting of the collection is the main motivator to get you to settle. Without the collection on the credit report, there’s nothing to motivate you to settle the item.
So settling a collection has 3 benefits to your credit score.
- Most collections report a balance due and a past due balance. Any account that is posting a past due balance hurts your credit scores more than just reporting a balance. Getting the collection paid will zero out the past due, which helps your scores.
- Almost all collection accounts are “re-aged” monthly. What this does to your credit scores is to keep them low as the collection is viewed as a new collection, even though the “open date” when it first appeared on your credit report could be years ago. Paying the collection account stops the re-aging process and it will hurt your scores less over time.
- Paid collections are easier to remove from a credit report. Once the debt is settled, the collection companies aren’t motivated to keep the collection on your report as they’ve been settled. Disputing the item for a deletion then becomes very effective removing it from the report, permanently. With a collection removed, your credit scores will increase with less bad credit on the report.
So before you hire any company for credit repair, settle your collection accounts. With them settled you’ll have more success with raising your credit scores. Combine collection deletion with lowering your credit card utilization and you’ll see very large credit score increases.
To this day, my all time record for a score increase was 214 points in 30 days. We achieved this by removing collection accounts and updating paid off credit cards through our “Rapid Rescore” process.
If you’d like more information about raising your credit scores effectively, please contact me. I’d love to help.
President and Certified Credit Expert