How Long Do Collections Stay on Your Credit Report?

Written By Scott Kessman
Last updated April 7, 2021

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Credit
April 7, 2021

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In these troubling economic times, it can be hard to pay some bills on time. Medical and credit card bills are some of the most common debts. Most companies will work with you to set up a payment plan if you have trouble paying on time. You can also try debt settlement if you have a lot of bills. But if you miss a few payments or take too long to pay, you may receive a notice from a debt collector.

When a company or organization hasn’t been paid, they may send your debt to a collections agency. What this means is they are entrusting a third-party agent to collect the debt from you. The debt collector will typically attempt the first contact via a debt collection notice in the mail. If they don’t receive a timely response, they may follow up with phone calls.

Debt collectors have a reputation for being aggressive, but this isn’t always the case. As long as you contact the debt collection agency and come up with a payment plan, they will work with you. And, more importantly, you won’t have to worry about how long collections stay on your credit report.

When Does a Collection Account Appear on Your Credit Report?

Companies normally wait until your debt is delinquent at least 90 days before sending it to a debt collector. Most debt collectors will also give you some time to pay your debt before they report it to the credit reporting bureaus. However, even if they don’t report the collection account to the credit reporting agencies, chances are that the company you owed will report a late payment.

Having a late payment on your account is bad enough and will negatively affect your credit score. But a collection account is worse because it will stay on your credit report for seven years. Additionally, the credit bureaus usually add another 180 days to that period to account for the time that the debt first became past due.

Does the Type of Debt Matter?

Medical debt, credit card debt, and any other debts that are reported as late and sent to collections are treated the same. Any reported collection account will remain on your credit report for up to seven years.

The only difference is when a company reports medical debt. Companies won’t report medical debt for at least 180 days. This is to allow time for insurance companies to apply payments to the debt. And, if a medical debt was reported to the credit reporting agencies and the insurance applies a payment afterward, the collection will be removed. Medical debt collections also don’t affect your credit score as much as other collection accounts.

Instead of asking how long do collections stay on your credit report, it would be better to concentrate on keeping them off. Obviously, the best way to avoid collection accounts and late payments is to always pay on time. But when that can’t happen, and you receive a notice from a collection agency, respond as quickly as possible.

Showing a willingness to pay your debt, even if it is over an extended period of time, can often keep the collections agency from reporting the account. However, once a company reports it, paying the debt will not affect the notice on your credit report. It also won’t improve your credit score. So you definitely don’t want to ignore any collection notice.

Can I Get a Collection Account Removed from My Credit Reports?

The short answer is yes. But it can be a tedious process, and it may not always work. Additionally, it will be up to the collection agency to assist you in this task. To make it happen, first speak with a representative from the collection agency before you’ve finished paying the debt. Ask if they will contact the credit reporting agencies to report that you have paid the debt. They call this a goodwill deletion.

On rare occasions, this may work. But you shouldn’t count on it as a viable option. And it is even less likely if you have other credit issues or if you are settling the debt for a lesser amount. Sometimes there is an option called a pay for delete letter, in which you pay a fee for a written request to have the collection account removed. This option is more viable with small debt amounts.

If the collection account is an error, you can dispute it with the credit bureaus. Each of the three major credit reporting bureaus — TransUnion, Equifax, and Experian — allow you to file a dispute online. You can also file a dispute with collection agencies by phone or mail. The credit agency will attempt to validate the claim. It may take some time, but if the collection account is indeed erroneous, it will be removed.

Why Doesn’t Paying Off a Collection Debt Improve My Credit Score?

When you make payments on time to creditors, your credit score steadily rises. This does not happen when you pay off a collection account. The collection account itself will still negatively impact your credit score for a period of seven years. Typically, the impact can be about 110 points.

It is still important to pay the collection debt as soon as you can. Doing so will help you avoid possible interest fees or debt-collection lawsuits. Your credit report will also show that the collection account was paid in full or settled. This can be beneficial if you are seeking a loan from lenders. Some lenders will look beyond your credit score and see that you are being more financially responsible.

What to Do When a Debt Collector Tries to Contact You

The first thing is not to panic. There is a good chance the debt has not been reported yet. A debt collection letter will usually have details explaining when the debt will be reported, and how you can avoid this by paying the debt. Contact the debt collection agency and be courteous and professional, even if they aren’t.

If you can’t pay the debt all at once, try to work out a payment plan. Also, ask them to put in writing that they won’t report the debt if you make your payments.

Know your rights regarding debt collection agencies. Some debt collectors will engage in unfair or illegal practices. You have rights and can take action if this happens.

Lastly, remember that a collection account on your credit report isn’t forever.

 

About the Author

Scott Kessman

I possess a strong 20-year background in marketing, digital marketing, and advertising. However, writing has always been a true passion of mine, and after working in corporate offices for many years, I turned my passion for writing into a full-time job. As a contract content writer for the last 12 years, I can craft engaging and informative content about a wide variety of subjects. I have also written and published two fantasy novels and a collection of short stories.

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