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How to Remove the Collections Account From your Credit Report in Canada

Loan Express | January 17, 2023

Loan Express does not require credit checks, decline a loan based off a credit check, nor do credit checks affect the minimum approved amount of the loan. The following article is purely for educational purposes.

What are Collections in a Credit Report? 

If you have debt in your collections, it often means that the original creditor has sent your debt to a third party to collect it (this includes credit card debt, loans, and mortgages). This third party is usually a debt collection agency. Most lenders will attempt to collect your debt themselves before contacting a third party, so if you have debt that’s past due and you are being contacted by someone claiming to be from a debt collection agency, be wary. 

How do Collections Affect Your Credit Report? 

Credit bureaus assign late payments based on how many days late you are in paying off your debt – therefore, the more overdue the payment is, the more it can affect your credit score negatively. 

Debt collection is very serious and can appear negatively on a credit report; however, it does mean that the original creditor has written off the debt. Lenders can also often consider the frequency of debt collections on your credit report, making it harder for you to get approved for a loan, car, or apartment/house. 

Thankfully, debt collection’s impact on your credit score fades over time. The debt collection will eventually fall off your credit report completely, usually after several years, and you can start with a clean slate. 

How to Remove Paid Debt Collections From Your Credit Report 

It is possible to remove paid debt collections from your credit report in Canada, but it is dependent on a few steps, circumstances, and factors. 

Step 1: Get your Credit Report

Review all of your credit reports to obtain details on your collection account. You can get a free report annually from various places, including AnnualCreditReport.com. Your credit report should say whether the collection is paid, the balance you owe, and the date of the account’s delinquency. Contact the collection agency if you do not know who the original creditor is. 

Finally, compare the collection details on the credit report with your own records for the account. If you haven’t kept records, log into your account listed with the original creditor to view your payment history. 

Step 2: Consider the Statute of Limitations

The Statute of Limitations on collection entries is 6 years from the date of the first missed payment. After the 6 years have passed, the collections entry will be removed from your credit report. If it has not been removed after this time, ask the creditors to remove it. Keep in mind that the collection entry will impact your credit score less and less as time goes on since creditors are more interested in your recent credit history.

Step 3: Request the Creditors to Remove the Negative Elements

Once you have paid off the debt, there are circumstances where you can remove the collections account on your credit report history sooner than the allotted 6 years. If you made regular payments on the account before it was sent to collections with no late payments for 6 months or more leading up to the account being sent to collections, you can ask the agency to remove their entry from your credit report.

You will need to provide evidence of on-time payments to the agency, but once they have this information, the agency will be asked to remove their entry from your credit report. However, collections agencies do not have to agree to this request. If this happens, get the agreement in writing to protect yourself from a case where the collection agency doesn’t follow through.

Step 4: Seek out Credit Repair Companies

If you’re having issues getting the entry removed from your credit report, you should consider working with credit repair companies. These companies will work on your behalf to try and remove the entry from your credit report, as well as helping improve your credit score and preventing negative items from appearing on your report in the future. 

While this can be a good solution, it comes at a cost, and you need to make sure the investment is worth it by understanding what to expect and how credit repair works. Credit repair agencies use a multi-step process to improve your credit by pulling your credit reports from major bureaus, identifying any negative items, and developing a plan to address them. 

How to Remove Expired Debt Collections from your Credit Report 

How to Remove Expired Debt Collections from your Credit Report 

Since collection entries stay on your credit history for up to 7 years, it can be difficult to remember to check if these entries have been removed during the allotted time or not. If you notice an expired entry that has not yet been removed, there are steps you can take to get it off of your credit report. 

Filing a Complaint with the Credit Reporter

If you see an expired entry, file a dispute with the credit agency for an expired collections entry. The credit bureau will investigate this entry and remove it from your credit report if they find it is expired. You can file this dispute online, over the phone, or by mail. If you choose to mail your dispute, please include the following:

  • Your name, phone number, and address.
  • A copy of your credit report with the highlighted expired entry.
  • The name of the collection agency.
  • Your letter asking for the expired entry to be removed.
  • The account number associated with the collection.
  • The date the collection was first reported.

Once the agency has received your request via phone call, online, or by letter – and they find that the entry is expired – they will remove it from your report and send you written confirmation that it has been removed. 

Does a Credit Score Increase when the Collection Account is Removed?

According to Forbes, your credit score can increase when a collection account is removed, as your payment history accounts for 35% of your score. How much your score increases depends on the items listed on your credit report, and if only negative items can be found, removing them will boost your score more than if you had several collection accounts on your report. 

Reasons Why Your Collections Account is not Showing up in Your Credit Report

When there is a legitimate collection account listed on your credit report, it can remain there for up to 7 years. To remove it, you can ask the company for a goodwill deletion, but this forgiveness is not guaranteed. If you have an inaccurate or incomplete collection account on your credit report, dispute it with every credit bureau that lists it on your report. This can remove the collection amount from your credit report. 

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