What is Pay for Delete?

What Does "Pay for Delete" Mean When it Comes to Unpaid Credit Card Debt?

Pay for delete is the process in which collection agencies or creditors remove any negative credit reporting in exchange for you satisfying and paying down an account in their office. The process has a low success rate and is not something that creditors typically offer since it does technically walk a gray legal line. The reason being is that it typically violates the Fair Credit Reporting Act, which requires creditors to report truthful and accurate information. There are a select few creditors who perform this process however. With this being said, it can work on occasion (even with an original creditor) but this is typically only the case for small balance accounts and many creditors will not even entertain the idea since it technically is not "fair" and "accurate" credit reporting. However, there are definitely some collection companies happy to skirt that legal line, so if this is your main objective, giving it a try really can't hurt. But you should also understand that the original lateness with the original creditor is likely to still be valid on older credit reports (which many creditors still use).

How Should You Approach the Collections Agency About This Kind of Agreement? What are the Chances of the Approach Working? Are There Any Risks Involved?

You should approach this type of agreement via a phone call or via a written letter and with a subtler approach. Creditors and collections agencies can be less likely to put this sort of agreement in writing since it is a grey area, however that doesn’t mean it’s not possible. The chances are slim but some collection companies will entertain it. In some instances, if you are settling a debt some collection companies will include a pay for delete as a part of the terms of settlement. However, there are always still risks that if you enter an agreement it still doesn't get reported correctly and the original lateness with your original creditor still shows up on your report. There is also a risk that it doesn't improve your credit score.

What Advice Do You Have for Someone Writing a Pay for Delete Letter?

First, it's important to make sure your debt hasn’t passed the statute of limitations and that said creditor is legally allowed to collect on the debt. Otherwise, sending a letter is simple (you can find templates on the internet) and remember to include the exact amount you are willing to pay for the removal of the debt. It's also important to make sure that the company you are talking to is the one showing up on your credit report! It’s important to always make sure you are paying off the correct party.

Don't bank on a pay for delete, not every company will do it and it's very likely the reporting on the original account still remains. Unless a pay for delete is with the original creditor the entire point of it is moot. I would recommend consumers instead focus on settling the debt for a better percentage, since this will improve your credit worthiness as well. Paying down debts (even in collections) improves your credit worthiness, and it's possible that paying the late account off positively impacts your credit score more than a pay to delete.

What are Some Alternative Ways for Someone to Repair or Fix Credit Outside of Pay for Delete?

In my experience, the best thing you can do to improve your credit is to get a secured credit card, focus on lowering your utilization rate and paying off any accounts with negative remarks. These are typically the top 3 things that are most impactful to improving a consumer's credit. This really depends on the situation. However, if you have little to no credit, becoming an authorized user on someone's account (that has good payment history/credit) could also be a big help.