Reddit user Kyle Gardner (not his real name) recently posted a thread about how he was able to increase his credit score 100 points by using a pay for removal service to make his delinquent accounts disappear from his credit report. Basically, Gardner paid a service to get his bad accounts removed from his credit report.
Quick Tip: When’s the last time you checked your credit score? See your free credit score on Credit Sesame.
Because many credit users don’t quite understand the nature of how these pay for removal services work — we decided to reach out to Gardner for the full story. If you’re skeptical about these pay for delete services, it’s with good reason. These types of services aren’t recommended. For one, they are expensive, and two, it’s no guarantee that your score will go up and the bad accounts will fall off your report.
[Related: 11 Shameless Excuses Ever Told to Debt Collectors]
Pay for delete services actually go against credit reporting bureaus’ policies. In a nutshell, credit reporting bureaus ban the practice of pay to delete, so disputing the item is often the only way a collections agency can get the item removed. The reason why they forbid this practice is because it skews what a lender would potentially see on your credit report if you pay to get it removed before the allotted amount of time has passed.
However, credit is an unavoidable aspect of one’s financial life, especially if you need to buy a new car, house, get a loan, get a credit card, you get the picture. Inevitably, there will be those who decide to go down this path out of desperation in the hopes of a quick credit fix. (Reality check: there’s no such thing as a quick credit fix.)
Before we share Kyle’s story, it’s important to learn as much as you can about pay for delete services, in case you’re thinking of doing it.
Gardner’s story
Poor credit profile breakdown:
– House went into forclosure
– Defaulted on student loans
– Defaulted on credit cards
– For 7 years he avoided using credit cards, and only used cash
– Credit score (falls into the “subprime” category for lenders, which is not good): 585
After his divorce 10 years ago, Gardner was living paycheck to paycheck in Tulsa, OK, barely able to make ends meet after his child support payments. On top of that, his ex-wife let their house go into foreclosure.
[Related: 5 Nastiest Credit Surprises for Divorcing Couples]
He defaulted on his student loans and credit cards and his credit tanked. In January 2015, his credit was around 585-590 when he and his new wife needed a loan for a new car. He realized he had to repair his credit quickly.
For seven-plus years after his credit plunged, Gardner decided to use cash only — no credit cards — until all his negative financial history fell off his credit reports.
Additionally, Gardner used pay for removal to clear two of his delinquent accounts, which were both with the same collections agency. In total, he paid about $250: about $180 to remove one of the accounts off his credit report and $70 for the other. In Kyle’s case, the total amount wasn’t very high, but perhaps that’s exactly why he decided to try his luck with pay for delete.
Here’s what happened
“It was very easy for mine as I just called them and explained that I needed to get these items removed from my reports,” he said. “This particular agency accepted payments via their website.
“When I demanded documented proof that the items would be removed from my reports, the rep on the phone simply ticked a box and asked me to refresh the page. There was now a bold banner across the page that said something along the lines of, ‘This message confirms our intent to remove these items from your credit report after payment.’ I took screenshots and documented everything just in case they didn’t come off.
“After that, I paid through their website using a secure debit card transaction. I did not have to give any payment info over the phone.”
Gardner didn’t receive any communication from the credit reporting agencies about it, but he did continue to monitor his Credit Karma and Credit Sesame accounts for updates. The two accounts fell off his credit report within about two weeks, he said.
Like Gardner, it’s a good idea to check your credit score frequently on Credit Sesame for free.
Riding the good credit wave
In addition to pay for removal, Gardner also asked his father to let him sign on as an authorized user on one of his credit cards. He only kept the card for emergencies.
As his credit began to improve and he was able to get new credit cards of his own, Gardner keeps his balances low — around 4 percent and never more than 10 percent of the credit limit — and he made sure to pay all his balances in full every billing cycle. His credit limits have increased over time and now he has credit lines approaching $50,000.
Near the end of 2015, Gardner’s FICO score had risen to around 765. Credit Sesame and Credit Karma reported his Vantage Score to be around 798-803.
What you need to know about pay for removal
If you’re thinking of going the same route as Kyle, here’s what you should know.
– Collections can legally remain on your credit report for seven years from the date the account became delinquent. The credit reporting agencies will not remove paid collection accounts from your report.
– Collections agencies are under no obligation to remove collections activity, even if it’s paid in full. You might have better luck negotiating with the original source of the debt.
– If a negative account appears on all three of your credit reports, removing it from one might not have any effect on the other two. (Ask if the collection agency or creditor reports to all three bureaus.)
– Collections agencies can’t report inaccurate or incomplete information to the credit bureaus, so if you have a legitimate dispute over a debt, you can ask for it to be removed on your credit report if you resolve it.
– Paying a collection account in full might help your credit score, depending on the scoring model used. FICO 9, the newest FICO scoring model, ignores all paid collection accounts but penalizes the consumer for unpaid collection accounts. The previous FICO scoring model, FICO 8, ignores unpaid collection accounts with balances under $100. VantageScore versions 3 and later ignore paid collection accounts.
– Newer scoring models (FICO 9 and VantageScore 3.0) can serve in your favor, but FICO scoring models are software that the creditor must purchase. Many creditors doing business today use older scoring model software.
– Pay off your balances to avoid being sued by creditors.
– Paid (and closed) positive accounts remain on your account for 10 years. Open accounts in good standing remain indefinitely.
Gardner was able to get his credit score up to the 800 range with pay for delete and other financial improvement methods, such as getting an authorized user card and paying off cards in full every month.
The best things you can do to improve your credit are pay all of your bills on time and keep working toward paying off your debts.
