Does a collection impact your credit score?

[Anonymous]

I just checked my credit report and I have right on page 1:

Partners Financial Collection

Loan Type: Collection Agency

Estimated date this item will be removed: 01/2018

Balance $0

Pay Status: Payment After Charge Off/Collection

So this is from a big dispute I had with my local gym and the amount of money I owed them. This collection agency got very threatening and said this would impact my credit score. Well I went ahead and paid it and just wanted to put it behind me. Well here it is on my credit report and I have no clue what to do to remove. I have read many thread on "Pay for Delete" but doesn't that only apply when you have a balance and you try to make some deal to pay it off in full or something in order to remove the negative report?

There is no balance, I paid it.....so how would I negotiate to get this off my report? Do I even need to? Does this impact my credit score?

[RobertEG]

Once reported, a collection is a major derog in FICO scoring.  Yes, unfortunately, it will have a substantial effect on your FICO score while it remains in your CR.

The negative impact of a reported collection is the same, even if paid.  Removal of its reporting must be secured to remove its FICO impact.

There are three basic ways to get a collection removed. 

First is to dispute the legitimacy of the reporting of the debt itself which will, if you prevail, require removal of the reporting of any collection activities reported on the debt. 

Your post refers to some dispute over the debt.  While paying the debt does not prevent you from still contesting the accuracy of its reporting, it certainly makes such efforts a bit harder. 

You can dispute with any party who reported the debt to a CRA, which is either the OC or the debt collector.  So, first question is whether or not the OC reported this account and its associated debt to the CRA.  If they did, I would suggest you dispute its accuracy with them, as they are the party with the business records required to verify the accuracy of their reporting.  If only the debt collector has reported to the CRA, then dispute is limited to their reporting.  Any "verification" they provide will most likely just be hearsay rubber-stamping of assertions made to them by the OC.

Second is to ask the reporting party, in this case the debt collector, for their "good will" (GW) by their voluntary deletion of their reporting.  A GW request for deletion has some incentive behind it if you can offer $ in the form of PFD, but you are correct, you lose that PFD incentive once the debt is paid.  Reliance is then only on their good will.  Debt collector GW is usuallly a rare commodity.

Third is to simply wait for 7 years plus 180 days to expire from the date of your first delinquency (DOFD) on the account with the OC that led up to the reported collection.  Thereafter, the CRA is prohibited under FCRA 605(a)(4) and 605(c) from continued inclusion of this adverse item of information in any CR they issue.

[MidnightVoice]

A couple of years ago I had ONE derog on my reports - a collection.  After it dropped of the average real FICO score increase was 51 points

[John060675]

Start sending out GW letters ASAP.  Trust me, you do not want it to be on your report.  It has dropped my score tremendously, and you will not see your score go back up for a long time with it on there. 

It might take several GW letters, but be persistent.  It is worth the time and cost of stamps to have it removed.  Good luck.