by admin /
February 12, 2021 /
Credit Reporting Errors
Will paying off a debt remove it from my credit report?
The general answer is no that a debt will not be removed upon payment. Someone who reports to your credit report is called a furnisher. This could be a bank, credit card company or a collection agency. If they report negative on your credit reports it could be as a charge-offs, late payments, collections, or repossession. However, they will not delete once you pay an account that has gone delinquent. The reasoning is you incurred the debt so they want to report it as accurate and for it stay on there as long as possible for a cautionary tale. There is not an incentive for the furnishers to let accounts go in the red only for the consumer to know they can pay later and have it deleted. That is why they keep a negative account reporting on someone’s credit even if it is paid late. The only exception to that is if you have a specific conversation with the furnisher and they indicate that they would delete the account upon payment or a settlement. Generally, this only applies to a collection agency. Not every collection agency will delete upon payment so the matter needs to be clarified before you pay. Although the company will say on the phone that they will delete rarely will they mail you letter indicating this. Usually if the company’s agent says that they will delete upon a payment or settlement it holds true. However, it is important to take notes during the call so you know the agent’s name, time you spoke and what they specifically said on credit deletion upon payment. If the agent consents you can record the call as well to confirm that the company will actually delete upon receiving payment. Credit card companies, loan companies and banks do not have policies where they credit delete for a paid delinquent account. No matter how much you plead with them the rule is that a negative account stays as is for being reported. There are obviously exceptions to this but what they will do is work with you on the status of they are reporting. Examples of what a status is are that credit card companies report a past due account as a charge-off, auto loan companies show as a repossession, and a mortgage can be reported as a foreclosure if it is seriously past due. Although the foreclosure can be tough to get removed a charge-off can be easier to work with. If the furnisher still owns the account and the delinquency is fairly recent (ie within a year) they may work with you changing the derogatory status. Simply call up the furnisher and see what their policy is on this. Essentially if you work out a deal they would change the negative status to account paid or settled. Although the mark will still hurt your credit it will not be a detrimental. You do not need to hire any debt relief or credit repair companies to do this. This can all be done on your own.