The TRUTH on “Pay For Delete” letters?
There is no such thing.
Collection companies often buy debts for pennies on the dollar.
Older accounts devalue in age, and are known as “junk debt”, and are often purchased on a spreadsheet with similar medical, utility and pay day loan type accounts. It's BIG business...over 50 Billion a year big.
Collection companies are more likely to get paid if a debt is causing pain or creating an issue, so they want to put it on your credit, and make it "sting". A sneaky tactic they are known for, to keep the pain fresh is to show inaccurate account dates so the account appears to be newer than it actually is. They know that since the law of diminishing applies to older accounts, the score will suffer more if there are new, or if an account appears newer than it really is, especially if that account is one of only a few recent derogs. Unethical? To say the least, they are also breaking the Fair Debt Collection Practices Act and violating YOUR rights.
So, your mortgage pro says to pay it and get a PAY FOR DELETION LETTER.
There is no such thing, per the Credit Bureaus services agreement with collection companies.
In fact, the service agreements prohibit this type of “blackmail” behavior. In their agreement, it states that creditors can not remove accurate information. The fact that a $250.00 collection account was paid does not change the fact that it was a collection account. It just has a lower balance, $0.00. And newer date, which could hurt your score because most scoring models put the majority of their focus on the date.
So paying it does not
remove it from your credit,
it renews the debt
and most likely drops your score.
Interesting isn't it?
So what about the Pay For Delete Letter?
There's no such thing.
Collection Companies often promise to delete accounts that you pay off, but they say they will give you a letter AFTER you pay it and you can send it in. You can, and it will update the balance to $0.00. And renew the date.
They also say to dispute it with them and they will ignore.
The credit bureaus are not stupid, they see patterns.
Collection companies pull credit to see if you have credit cards, own property, have liens or judgments and even use it to team up with each other. That's how they get their info about you, from your credit. That's also how they get you to pay them.
If they violate their agreement and get caught, their account will most likely end up getting shut down or closely guarded.
They HAVE to have the ability to pull credit and report to the credit bureaus, without it they have no leverage.
I see the unethical practices they use everyday, they will do or say whatever is necessary to get your debit card number. If they will lie to the credit bureaus, the main thing they have to have to in order to effectively run their business, then you can bet they will lie to you, a complete stranger that owes them money.
Do your homework first!! Credit isn't always what you think!