Remove delinquent in credit report

I had FIOS internet connection. As I was relocating and happy with Fios,
I asked verizon to transfer my service to new location. But they said
Fios service is not available in new location and asked me to cancel the service. I cancelled the service and asked if there is any due I need to pay. They said I didn't have any dues but I would get refund from Verizon as I used to pay one month bill amount in advance. Also I had enabled auto payment. I asked to send final statement and refund to the new address. After some times when I applied for car loan, I shocked to see that Verizon put a collection entry on my credit report. But I haven't received any communcation for this and don't know what for this. I checked my on-line account and it shows zero balance. Also I never disabled auto pay option.
So even if due from my side, it should be deducted automatically.
I contacted service department and they couldn't give proper answer. As I want to remove entry from credit report, I paid the amount and asked them to remove entry from credit report and also send final statement.
They said they will remove from credit report and will send final statement. They haven't sent. This was happened few years ago.
Now I am planning to apply mortgage loan and noticed that credit report entry was not removed and it is affecting my credit scores hardly.
Please somebody let me know how to remove the entry from credit report and also find why they charged me instead of refund?