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 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, and 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
for them 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 a medical debt - As
mentioned earlier, some forms of medical debt can be removed 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.
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.
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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