You may already be checking your credit report regularly and you might have developed the habit of challenging or reporting any suspicious activity. But what do you do with a stubborn charge that won’t go away? You know you shouldn’t have to pay it, but for whatever reason, you can’t get it off your report. You call the creditors in question and they tell you they understand, it’s no big deal and they’ll gladly delete it from your credit report if you pay a small fraction of the charge. What do you do in that scenario?
For a lot of people, paying a couple of hundred dollars is better than the headache or the full amount of the charge. They don’t have to worry about the charge, and they know that over time they’ll more than make up that money in savings on credit card interest charges. It’s all part of the cost of doing business, they think, so they cut a relatively small check.
For the rest of us, we don’t want injustice to stand. Or maybe we can think of a better way to spend a few hundred dollars than paying a scammer. We could put it toward retirement, our kids’ college funds, or buy ourselves a new fur coat for stepping out on the town. Maybe not, who knows how much a fur coat is, really? The point is that spending a few hundred dollars on a personal luxury, no matter how frivolous, is still a better idea than spending it on a scam.
Legitimate credit agencies don’t engage in pay-for-delete schemes. The way it’s supposed to work is that if a debt is reported as being sent to collection, it stays on your credit report for seven years, with certain exceptions, including some medical bills. Often, big credit agencies will sell the debt to smaller ones for less than what is owed, so they can receive guaranteed income, then the smaller agencies are looking to get some amount paid off, generally more than they paid for the debt.
Those smaller agencies are often less scrupulous. They offer to report the whole debt as a mistake if you pay a certain amount. Sometimes, that amount is the debt in full, which nets them a tidy profit. Other times, it’s a smaller amount. In theory, this could have a very positive effect on your credit.
However, there’s no guarantee they’ll follow through, nor a reason to put the offer in writing, because the process isn’t above board. In addition, if a creditor creates a charge that shouldn’t be there, they’ll often ask for pay-for-delete so they can mark it as removed, making it harder to identify a fraudulent charge after the fact.
Arm yourself with knowledge. Here are three scenarios in which a charge can be removed from your credit report:
1. You never got the bill (or the bill was for an incorrect amount).
This is pretty obvious, and you shouldn’t have to pay a dime. Make sure to challenge suspicious charges. If you don’t believe that you incurred a debt, let the collection agencies know. Ask to see evidence of the bill; sometimes the creditor can’t produce it, and they will waive the charge. Make sure to follow up afterward to confirm that the charge was removed.
2. The bill was for medical debt.
As mentioned earlier, credit bureaus can remove some forms of medical debt from your record. Double-check this with your accountant or lawyer. Make sure you also check with your insurance company so you know they paid as much as they were obligated. Ask the medical provider for a detailed, itemized bill, then ask your insurance company for your explanation of benefits (EOB). At a minimum, show the EOB to your medical provider to make sure they’re billing correctly. Every case is different, so be detail-oriented, write down everything the provider and insurer tell you and seek help from a professional. A single medical bill can be worth 25 points on your FICO score, so it pays to follow through. Remember, a creditor is not a medical provider, so they will have much less freedom to rework old bills, which is why they may be more interested in pay-for-delete.
3. It’s a small-time creditor.
This is where the line between good security and under-the-table scam starts to blur. Small-time creditors want the revenue and they’re going to be more likely to offer shady practices in exchange for money. Make sure to get everything you can in writing, and be suspicious. If they’re unscrupulous enough to try pay-for-delete, then they probably didn’t do all of their due diligence to find out if you paid the bill. Ask for evidence. Make sure you really owe the money. Be persistent; this is real money that you can spend in better ways than on scams.
It’s important to stay on top of your credit report, but don’t let that number at the top dictate your life. Yes, you’d like it as high as possible, but that’s not a reason to give money to scammers. If you do the work on your end, you can often get to the bottom of these charges, save your credit score, and keep cash in your pocket.
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