Having a good credit score is beneficial in numerous ways. It impacts your future loan eligibility, credit card approvals, interest rates charged on your loans, and even your job prospects. Because of this, having a collection appear on a credit report can be devastating. 

What is a collection on my credit report?

A collection is an outstanding loan EMI/credit card bill that has been unpaid for over 90 - 180 days. When you miss paying an EMI or credit card bill, the lender usually gives you a grace period to pay it with penalties. When no payments are made during the grace period, the loan account is termed as collection and is added to your credit report. 

A collection stays on a credit report for nearly 7 years. It negatively impacts your credit scores. The good news, though, is that it's possible to stop collections from negatively affecting your score.

First of all, it’s important to understand that the quantity of the collection is irrelevant. That said, the more collections you have, the more they will affect your score. The biggest change will occur when the primary collection hits your account. Every time the lenders report a further collection, this may have an impression, albeit marginal. On the other hand, if lenders stop reporting collections, your score will improve slowly over time. In addition to the above, it’s important to note that paying off a collection will, in the majority of cases, have either zero impact on your score or even a negative impact. 

If you wish to reverse the impact of a collection, then the trick here is to get it off completely from your credit report. The best way to do this is to contact the lenders and offer to settle the debt in return for deleting the collection from your report. Not all lenders will agree to this, but many will in order to recoup the money that they are owed, so it is definitely worth asking.

How much will my credit score increase if I manage to get the collection removed?

The truth is, there’s no concrete answer because it will depend upon what proportion the collection is currently impacting your account. If the collection has lowered your score by a certain point, getting it deleted should increase your score by a certain point. Reputed credit repair service providers like CreditMantri can further advise you on this issue.