How Long Do Collections Stay on Your Credit Report?
Collection accounts can hurt your credit to the point where it can be difficult to qualify for a loan or credit card. Over time, though, the negative impact of a collection account can diminish.
But how long do collections stay on your credit report? And do collections drop off a credit report at some point? Here’s everything you need to know.
How long until collections are removed from a credit report?
Collections accounts remain on your credit report for seven years from the date the original account became past due, not on the date the debt gets sent to collections.
This means that if you missed your first payment in January 2020 and your lender sent the bill to collections six months later, the negative item will fall off your credit report in January 2027.
Because it takes so long, it’s crucial to avoid missing payments if you can. That said, FICO and other scoring models tend to favor newer information in your credit history over older information. So while the collection account will impact your score the entire time it’s on your reports, that impact can be outweighed over time by newer positive information.
Can I get a collection account removed sooner?
Although the standard period is seven years, it is possible to get the negative item removed from your credit report sooner.
For starters, it’s possible that the information on your credit report is inaccurate. Start by asking the collection agency to validate the debt to make sure it’s yours and the figures are correct. If they can’t provide you with enough evidence, the collection should be removed from your credit reports.
Second, it’s possible for creditors and even the credit bureaus to make mistakes. If a collection account is listed on your report in error, you can file a dispute with the credit reporting agencies to have it removed. Each credit bureau will perform an investigation, which can take up to 30 days. If they find that you’re correct, they’ll remove it for you.
Finally, you may be able to get a goodwill deletion from the collection agency or the original creditor. You may be able to write a letter and plead your case. Or you can explain that the debt was sent to collections for reasons outside of your control.
There’s no guarantee you’ll get the relief you’re looking for, but it’s worth a shot.
It’s important to note, though, that a collection account is a separate item from the missed payment on the original debt. So even if you can get the lender to remove a legitimate collection, your credit score may not bounce back immediately.
How collections affect your credit score
Your payment history is the most important factor in your FICO score. A collection account signifies that you stopped paying the account as agreed. The amount of time it takes for an account to go to collections can vary by lender, but it typically doesn’t happen until it’s stopped attempting to collect payment from you directly.
The impact on your credit score is tough to quantify because there are so many different factors that credit scoring models consider. But even if it’s close to falling off your report, lenders can still check your credit report, and if they see a collection account, it could make it more challenging to get approved.
Should I pay off my collection account?
You may be wondering if it’s even worth it to pay a collection account. After all, the damage has already been done, right? There are, however, several reasons to take that step.
First, in one of the newer FICO scoring models, FICO 9, paid collection accounts no longer hurt your credit score. Unfortunately, many lenders are still using older FICO models. This means that it may take a while for that feature to work in your favor.
Even without the credit score aspect, though, there are several reasons to consider paying off the account. Most importantly, it keeps the collection agency from suing you. If this happens and the agency wins, the court may pass judgment allow them to garnish your wages and place liens against your property. It’s also possible to have your bank account funds frozen or garnished to satisfy the debt.
How to improve your credit after a collection account
If you have a collection account on your credit reports, take steps to establish a positive payment history going forward. Again, it won’t completely neutralize the impact of the collection, but it can help.
Here are some things you can do:
- Make it a priority to pay all of your bills on time.
- Apply for a credit-builder loan or a secured credit card to add new positive accounts to your credit file.
- Keep your balances on your credit cards low relative to their credit limits — the lower, the better.
- Avoid taking on new debt unless absolutely necessary.
- Ask a family member to add you as an authorized user on their credit card.
Taking these steps and more can make it easier for you to develop good credit habits, which can make a big difference in the long run to rebuild your credit score.
The bottom line
Collection accounts can have a significant negative impact on your credit score. As a result, it’s best to try to avoid missing payments in the first place. But if you’re already past that, understanding the credit score implications and what you can do to potentially fix the problem or make improvements going forward can help you get back on track.