A bad credit score can work against you in more ways than one. Getting approved for new loans or lines of credit may be difficult, and even if you qualify, you'll probably end up paying a higher interest rate to borrow. A low credit score can also result in having to pay higher security deposits for utility or cellphone services and higher premiums on insurance.

In that situation, you might consider a tactic known as "pay for delete," in which you pay to remove certain negative information from your credit report. While it may sound tempting, it's not necessarily a quick fix for better credit.

What Is Pay for Delete?

What is pay for delete? "Pay for delete is essentially when you are contacted by your creditor, or you contact them, and you agree to pay a portion or all of the outstanding balance with an agreement that the creditor will contact the 澳洲幸运5官方开奖结果体彩网:credit bureau and remove any derogatory comments or indications of late payment on the account," says Paul T. Joseph, attorney, CPA, and founder of Paul T. Joseph Tax ▨Law in Williamston, Michigan,

How to Request Pay for Delete

You'll need to send a letter to the creditor or 澳洲幸运5官方开奖结果体彩网:debt collection agency to ask for pay for delete. A pay𝔍 for delete letter should include:

• Your name and address
• The creditor's or collection agency's name and address
• The name and account number you're referencing
• A written statement saying how much you agree to pay and what you expect in return with regard to the creditor removing negative information

You're essentially asking the creditor to take back any negative items that it may have added to your credit file in connection with late or missed payments or a collection account. By paying some or all of the outstanding balance, you're asking the creditor to show good will and remove negative information from your credit report for that account.

Is Pay for Delete Legal?

The Fair Credit Reporting Act (FCRA) governs how credit information can be collected and sold. Anything that a debt collector, creditor, or credit bureau does regarding a credit report is based on the FCRA, says Joseph P. McClelland, a consum🔥er credit attorney in Decatur, Georgia.

Credit bureaus are required to provide accurate information, and consumers have the right to dispute anything they believe to be inaccurate, which the bureau must then investigate promptly. Consumers can sue if credit bureaus fail to follow the FCRA rules.

Technically, pay for delete isn't expressly prohibited by the FCRA, but it shouldn't be viewed as a blanket get-out-of-bad-credit-jail-free card. "The only items you can force off of your credit report are those that are inaccurate and incomplete," says McClelland. "Anything else will be at the discretion of the creditor or collector."

๊Removing Collection Account🧸s From a Credit Report

Whether your attempts to use pay for delete are successful can depend on whether you're dealing with the original creditor or a 澳洲幸运5官方开奖结果体彩网:debt collection agency. "As to 🎃the debt collector, you can ask them to pay for delete," says McClelland. "This is completely leg𝔍al under the FCRA. If going this route, you will need to get that in writing, so you can enforce it after the fact."

However, pay for delete with a debt collector may not remove negative information on your credit history that the original creditor reported. The creditor may claim that its contract with the debt collection agency prevents it from changing any information that it reported to the credit bureaus for the account. That said, some debt collection agencies take the inജitiative and request that negative account information be deleted for customers who have successfully paid their collection accounts in full.

Before taking this step, consider how collection accounts may affect your credit score. For instance, the FICO 9 credit scoring model that some lenders use doesn't factor paid collection accounts into credit score calculations—but not all lenders use this model. So, if you've paid off or plan to pay off a collection account and you'll be 💎working with a lender or other company that uses FICO 9, then you may not need to pursue pay for꧒ delete.

Removing Bad Credit History With a C🥀redit Repair Company

Hiring a credit repair company is another way to try the pay-for-delete strategy to remove 澳洲幸运5官方开奖结果体彩网:bad credit information. Credit repair companies "essentially do the work for you by contacting the credit ♋reporting agencies and providing objections to errors contained in the report or requestin💖g that items that are untrue or incorrect be removed from the report," says McClelland. In this instance, you're not necessarily paying off any outstanding balances. However, you will pay the credit repair firm a fee to act on your behalf to remove negative information.

The fees that credit repair companies charge can vary. Typically, there are two types of fees: an initial setup fee and a monthly service fee. Investopedia's research to find the best credit repair companies found that the initial fee often ranges from $0 to $100, while the monthly fee typically runs from $50 to $150, although some companies charge more. Many companies offer multiple plan tiers.

When considering the fees, it's important to weigh what you're getting in return. According to the Consumer Financial Protection Bureau, credit repair companies can't legally do anything for you that you can't do for yourself. To do repair your credit on your own, you have to be willing to review your credit reports for inaccurate negative information, reach out to the credit bureaus to dispute that information, and follow up on those disputes to ensure they're being investigated.

If you decide that the time-saving aspect of working with a credit repair company is worth your money, you'll want to thoroughly research any you're considering. Joseph says most credit repair companies are legitimate, but if you come across one making promises that seem too good to be true, that's a red flag that it might be a scam, according to the Consumer Financial Protection Bureau. (Investopedia publishes a regularly updated list of the 澳洲幸运5官方开奖结果体彩网:best credit repair companies.)

Also, consider the timing before pursuing credit repair services. "After several years of [a negative item] being on your report, the negative impact on your credit score has likely passed," McClelland notes. In addition, negative information will eventually fall off your credit report automatically.

Repairing Bad Credit Yourself

If you would rather not use pay for delete or pay a credit repair firﷺm, there are steps you can take to begin getting your credit back on track:

• Review your credit reports for inaccurate negative information. If you find any, you can initiate a dispute online with the credit bureau reporting the information. The major credit bureaus explain the necessary steps on their websites.
• Get in the habit of paying your bills on time every month. Payment history has the most significant impact on credit scores.
• Focus on paying down balances on any open credit card or loan accounts to improve your 澳洲幸运5官方开奖结果体彩网:credit utilization ratio.
• Research 澳洲幸运5官方开奖结果体彩网:credit builder loans and secured credit cards as additional credit-building options.
• Consider having someone you know and trust with a strong credit history add you as an 澳洲幸运5官方开奖结果体彩网:authorized user to one of their credit cards. This will add that card account to your own credit reports, so only do this with someone you have a good relationship with and trust well, and only for a card account that has always been in good standing.
  
• Weigh the pros and cons of 澳洲幸运5官方开奖结果体彩网:debt settlement to resolve collection accounts or 澳洲幸运5官方开奖结果体彩网:charge-offs. Debt settlement can allow you to pay off debts for less than the total you owe; like credit repair, 澳洲幸运5官方开奖结果体彩网:debt settlement companies can help you through the process, but be aware that they charge hefty fees (usually much higher than for credit repair).
  

Frequently Asked Questions (FAQs)

The Bottom Line

Bad credit doesn't have to be permanent. There are things you can do, including pay for delete, to 澳洲幸运5官方开奖结果体彩网:improve your credit history. Paying to have bad credit items removed from your credit reports can be effective. Still, it's worth exploring othe🐽r options if you don't have money to pay off an outstanding balance or to cover the fees that credit repair companies can charge.