Collections are derogatories that pull your credit score down. They affect it for 7 years! Even paid accounts may work against you, as not all lenders use the most popular formulas. To develop the right strategy, begin by determining where you stand. Possible methods include credit disputes and goodwill deletion.
Step 1. Check the Score
Find your total via My FICO or apps like Credit Karma and Credit Sesame. The second most common system is VantageScore, but it is based on a similar combination of factors. While finding out one’s score is a piece of cake, changing it is a hassle. That is why credit fix companies reviewed here are so popular.
Both methods use a scale from 300 to 850. You need at least 670 points to have a good FICO score, and at least 740 for very good. The excellent category extends from 800 to 850, but lenders usually price their products for the entire group, so 800 is enough.
Understand how many points you need to gain. If you are applying for a specific product, the lender will have a particular requirement. Generally, loans issued by the government, such as FHA mortgages, have a lower threshold — you may even qualify with 580.
Step 2. Check the Reports
If an increase is necessary, check the accuracy of your reports. Go to www.annualcreditreport.com and download the documents from TransUnion, Equifax, and Experian at once. Any of them could need correcting. Around 20% of Americans have one or more mistakes in their credit histories.
If the collections are false, you can request removal. If they are correct, you may find other deficiencies allowing a score boost. Credit repair companies can manage everything on your behalf. Pay attention to the following:
- Account number
- Account status (paid, charged off, closed)
- The date the debt went delinquent for good
Your information changes all the time, as lenders have different reporting cycles. Until April 20, 2023, all reports may be downloaded for free every week. Previously, this was an annual service.
Disputing Collections

Finding a wrong collections account is not a rarity. It may be too old to be reported or completely false. These derogatories must stay on records for 7 years after becoming forever delinquent. If the debt is still lingering after 7 years, you have the right to dispute it.
Another possibility is that a paid account will show as unpaid. Unfortunately, any reporting agency can make such glaring errors. In this case, you need evidence to support the claim. The easiest way to handle inaccuracies is by hiring a repair firm. The team will collect the necessary proof and communicate with bureaus to have the collections corrected.
Sometimes it is not the bureau but the debt collector that makes a mistake. In this case, you or your repair company should ask them to verify the debt. Like bureaus, collectors have 30 days to investigate the claim. If validation is impossible, the item will be removed.
If the Debt Has Been Paid
In this case, you may ask for a so-called goodwill deletion. The original lender or collector may agree to stop reporting the derogatory. Send them a formal letter and explain why you want the information deleted. This method does not always work, but it is still worth trying. Especially when you have made a series of timely payments after the debt was paid. If you are lucky, the collection itself will disappear. The missed or late payments that caused it will still be displayed, but the score will grow.
At the same time, you may raise it using rebuilding methods. For instance, lowering your credit utilization ratio can do the trick. Pay off all or some of the balances on your credit cards, or extend their limits. Experts recommend keeping the ratio under 11%. It means that if the total limit of your credit cards is $10,000, you should only spend $100 for the best results.
What Not to Do?
Some consumers manage to sign a so-called “pay for delete” agreement with their collectors. This allows them to have the derogatories removed in exchange for payment on the debt. It is more effective than requests for a goodwill deletion but potentially unethical. In the future, the method should disappear completely. Like lenders, collectors are obliged to report only accurate information.
Can You Improve the Score by Simply Repaying the Collection?
The most common misconception related to collections is that you can erase the bad ratings by paying them off. However, the situation in practice is much more complicated than that. The main issue is that issues that you make with delays and bad selection of loans in the past can affect your score for a longer time. In most cases, bad rates will be seen on your score for at least 7 years. The negative marks will remain as long as there are active listings of your previous issues. The best way to avoid this kind of problem is to pay attention and never delay your payments.
How to Improve the Score?

The credit rating is used as a factor for financial institutions to determine can you get a loan, and which sum can be provided to you. The main advantage of having a good rating is that you can easily get funds for a new house, car, or any other thing. On the other side, it might require years to fix bad ratings.
Even if you manage to get a loan with bad rates, it will mean that you will have much higher interest rates, which leads to increased expenses over time. Therefore, it is questionable how smart is it to get that kind of loan in the first place. However, some methods can help you to avoid or improve your rates.
First of all, you should revise your report and check if certain issues are affecting it. The main factors that determine the ratings are previous loans, delays in payments, types of loans, and how much money you already owe. One of the best ways to improve the rates is to pay more attention to monthly installments and be sure to never be late.
The great thing is that you can use mobile banking options today, where you can set automatic payments and secure that all of your bills are paid in time. Also, avoid taking so many loans. This can be especially important if you are planning to get a loan and buy a new house, car, or invest in a business.
Avoiding small loans over time will mean that you won’t have any issues with financial institutions, which directly affects the rates. On the other side, not getting any loans will also leave a negative mark on the report. Therefore, you should take loans from time to time, but be sure to pay them in a determined time.
Last Words
It might seem complicated, but there is a way to improve your ratings by dealing with collections. First of all, try to resolve previous issues with debts. In that matter, pay all of your previous duties and set the account to be 0.
From that moment, you can start with creating the rating from scratch. It will take some time, but that is the only way to regain the ability to get much better and higher loans from banks. It is important to know that there are no shortcuts and that you will need patience and concentration to avoid the same mistakes again.