The Better Credit Blog

Want a Collection Entry Removed From Your Credit Report? Try Asking.

Simply asking a creditor to a remove bad credit entry is probably something not too many people think would render any positive results. You might be even more skeptical if the debt is paid. After all, you have already paid the debt, what reason do they have to dedicate their resources to removing a bad entry from your credit report? Well, they don’t have any reason, but that doesn’t mean it can’t be done.

When I finished college I forgot to turn in my dorm room key. A couple of week later I received a bill in the mail for $70. My response was something like, “Screw you, I have given your institution over 20 grand for a semi-lousy education –most of which I could have learned on my own.” Their response was something like, “Okay, we’re sending this to collections.” Now I don’t know how the debt got paid, because I never paid it (for I vowed never to do so). Perhaps in the chaos of wrapping up everything, my parents paid it?? I cannot be for certain, but still, it showed up as ‘paid’ on my credit report.

Forward 3 years

The entry still showed up as ‘paid collection’ on my credit report and was therefore hurting my credit score 50+ points. Here is how I got it removed: I kindly asked them to remove it out of goodwill using a little known method called ‘writing a goodwill letter’.

If memory serves me correctly, my letter went something like this:
Dear Sir/Madam,
Following college graduation, I accidently forgot to return my dorm room key. The university sent me a bill for $70 which I was unable to pay. I had very little money and was trying to get on my feet, and therefore the $70 dorm room key charge was sent to your collection agency. The collection has since been paid. I am now on my feet and attempting to purchase a home for my family, but am unable to receive decent mortgage rates due to having a collection on my credit report. I am kindly asking that perhaps out of goodwill, your agency would consider removing this collection from my credit report and thus helping me purchase a home.
Best regards,
Ryan Lynch

I didn’t expect this to work, but three weeks later the collection was completely removed from my credit report.

Many people have small paid collection entries on their credit report and probably don’t realize how much these little bastards are hurting their credit score. In all sincerity, you’d be surprised how well goodwill letters work. They work best on small collection accounts, and the key is to make them feel sorry for you.

(3 votes, average: 5 out of 5)

Bankruptcy Can Be a Better Option Than a Debt Settlement Company

Good evening. It has been awhile since my last post due to an unforeseen business trip. I was in Orange County, CA for 7 days and have returned to Colorado (it’s 25 degrees and snowing –an undesirable contrast).

As promised, I will dedicate the efforts of this article completely to explaining why you should stay away from debt settlement companies. Thankfully, using a debt settlement company was one mistake I didn’t make. I am guessing that the points I am about to present within this article will be enough to persuade you from going to a debt settlement company, but nonetheless, it’s important to keep this one point in the front of your mind: debt settlement companies are selling you a product regardless of if they claim to be nonprofit.

How Debt Settlement Companies Do Business

Usually you will find that debt settlement companies offer to negotiate your debt with creditors by promising to pay the debt in one lump sum (which obviously creditors love). However, the debt settlement company won’t make this offer until you have secured most of the amount agreed upon between the debt settlement company and the creditor. The agreed upon amount is secured by requiring you to setup a savings account and make deposits until the amount is met. While this can work in some cases, let it be known that in most cases, this will hurt your credit score and cost you more money.

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How College Students Are Taught Personal Finance by Credit Card Companies

If you have attending college in the past 10 years, it’s likely you keenly remember receiving about 20 pre-approval credit card offers your first semester. And gauging by the numerous emails I receive daily on the subject of credit card debt due to college, it’s likely you applied and received a few of those credit cards. In fact, it was the credit card debt I accumulated in college that served as a catalyst for my credit disaster.

Credit card companies, like cigarette companies, are smart when it comes to luring in potential lifelong customers when they are young and vulnerable. They cleverly setup booths on college campuses, give out free stuff like t-shirts and book bags, and mail students letters aimed to create a subtle hint of pride within. The statements usually say something such as, “You’re in college now! It’s time to start building you’re credit history!” How kind of them to notice and look out for my future. It’s quite alluring.

Students are obviously a good target. They are likely far away from their caution-invoking parents, don’t have a full-time job, need money for food and beer, and may or may not be financially educated. I could name a dozen more logical reasons why students are good targets for credit card companies, but I want to put at least some restraint on your ability to write, “duh!” in this article’s comments.

Universities are banning credit card companies from marketing on campus

There are has been some progress to limit credit card companies ability to market directly to student on campus. An article over at Bankrate says that some 300 universities have banned it altogether. While this is mildly encouraging, it doesn’t address any real plausible solution –again, clever marketing folks will find an equally successful way to grab students.

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