How Long Do Collections Stay on Your Credit Report?

How Long Do Collections Stay on Your Credit Report?

How Long Does a Collection Account Stay on a Credit Report?

The Fair Credit Reporting Act lays out that the collection has to stay on your credit report for up to seven years from the date of default on the original account. This is to give lenders a clear picture of your financial behavior so they know the risks of lending you money.

However, on a credit report, a paid collection can still stay on your credit report for up to seven years, regardless of whether the account has a $0 balance.

After seven years, the paid collection will automatically drop off your credit report.

If There Is Inaccurate Information on Your Credit Report

If you are hoping to delete a paid-off collections account from your credit history so that you can immediately boost your credit score, there are other ways to go about achieving that aim. While raising your score to any significant degree takes time, patience, avoiding late payments, and a dedication to good debt management habits, working with a credit repair organization can help you boost your score quickly. This is a good approach to consider if you’re trying to raise your score by a small amount to secure better terms for a major upcoming purchase and there is inaccurate information reported on your credit history.  

Hire a Credit Repair Organization

Although credit repair organizations ultimately can’t do anything that you can’t do yourself for free, working with them can be helpful if you are uninterested in making credit dispute efforts on your own. Beware of any type of credit service company that guarantees you that they can raise your credit by at least a certain amount or make negative information that is accurate disappear. It is illegal to remove legitimate negative information from your credit report, regardless of who actually does it. These firms are ultimately governed by the Credit Repair Organization Act (CROA). This means that any credit repair firm that promises to help you must adhere to the following requirements:

  • They must advise you of your rights in a written contract that clearly outlines the details of the services that they will perform

  • They must give you a 3-day right of rescission that you will have in writing, where you can cancel within the first 3 days without any fees being assessed

  • They must tell you in writing how long their services will take

  • They must tell you upfront exactly what they will charge for their services

  • They must disclose any guarantees that they make in writing before you sign any contract

If the credit repair company that you hire does not furnish you with this information before beginning to work on your credit, then you have several recourses of action that you can take. The first step is to file complaints with the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). The FTC has the enforcement power in this case, so file your complaint with them first. Then you’ll need to file a complaint with your state’s attorney general (AG). If all else fails, you can sue your credit repair company in federal court. 

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What if the Information Listed on Your Credit Report Is Wrong?

It is important to immediately dispute any debt that is not being reported accurately on your credit report(s). Each credit bureau receives information from creditors, although not all creditors report to each bureau. It’s important to pull a free credit report from each of the credit bureaus on an annual basis for review, if not more frequently than that. 

If an item shows up on your report as not being paid or the amount of the debt reported is larger than the actual debt (or any other kind of inaccurate information is listed on your credit history), don’t hesitate to write a dispute letter to all three of the major credit reporting agencies (Experian, Transunion, and Equifax) as well as VantageScore and dispute the inaccurate information. The Fair Credit Reporting Act (FCRA) legally requires these companies to remove any item in question until it has been either verified or corrected. Make sure you only contest inaccurate information, though; trying to dispute accurate information will only hurt you in the long run. 

3. Choose a Plan of Action

Here are three actions you can take to attempt to remove collection accounts listed on your report.

1. Dispute Inaccurate or Incomplete Collection Accounts

If you have inaccurate or incomplete collection accounts on your credit report, the Fair Credit Reporting Act gives you the power to dispute this information directly with the credit bureaus or creditor. You can send a dispute using the dispute form on each credit bureau’s website. The Federal Trade Commission has sample dispute letters on its website if you need help crafting one.

After you submit your dispute, a credit reporting company has 30 days to investigate your claim. If the credit bureau finds the provided information correct, the collection account will be removed from your report. However, if it finds that the company reporting the information was correct, the collection account will stay on your report for up to seven years.

2. Ask for a Goodwill Deletion

If you have a paid collection listed on your report, you can simply ask the debt collector or original collector to remove the collection. This usually involves sending the debt collector or collection agency a goodwill deletion letter explaining your mistake, asking for its forgiveness and showing them how your payment history has improved.

With this option, there’s no guarantee your collection will be removed from your credit report, but it’s worth a shot. If the account is removed, it may help you qualify for better terms on personal loans, mortgages and credit cards.

3. Wait Until It Falls Off

When the debt in question is legitimate and you can’t convince the debt collector to delete it from your report, your only remaining option is to wait. After seven years from the date the account first became delinquent, the collection should fall off of your credit report.

Although this means the collection will continue to impact your credit score; its impact will lessen as time passes.

4. Negotiate a Pay-for-Delete Agreement

When your original creditor can’t collect your past-due balance, it’ll sell your debt to a debt collection agency which means you now owe the money to the agency.

But when the agency buys your debt, it doesn’t pay the full amount. It may pay only a fraction of what you owed on your original debt.

If the collection agency can get you to pay off the debt, it makes a profit. As a result, you could leverage a payment in your negotiations.

How to Negotiate a Pay-for-Delete Agreement

You offer to pay part of your balance due in exchange for getting all negative information related to the debt off your credit report.

For this to work, you have to get this agreement in writing. An agreement over the phone won’t hold up. You could do your part and pay the agreed-upon amount only to learn the agent you spoke with didn’t make a record of the deal.

Now, if you owe $30,000 on an old credit card charge-off, you’d have a hard time coming up with a lump sum so large. Even 30 percent would still be $9,000. But this pay-for-delete strategy can help when you can afford to make a payment.

Late payments can be reported separately even though it’s associated with the same debt. Though, if you negotiate with your creditors to get a collection account removed, be sure all the negative data goes away.

1. Do Your Research & Check All Credit Reports

To get details on your collection account, review all of your credit reports. You can do this by visiting AnnualCreditReport.com. Normally, you can only get one free copy of each report annually. However, due to the Covid-19 pandemic, you can check your reports from all three credit bureaus for free weekly until April 20, 2022.

Your credit report should list whether the collection is paid or unpaid, the balance you owe (if any) and the date of the account’s delinquency. If you don’t know who the original creditor is and it’s not listed on your report, ask the collection agency to give you that information.

Afterward, compare the collection details listed on the credit report against your own records for the reported account. If you haven’t kept any records, log into the account listed to view your payment history with the original creditor.

6 Misconceptions About When Collections Will Fall Off

There are some common misconceptions about what affects the date a collection will fall off your credit report. Below is a list of other dates that do not affect the date a collections account rolls off your credit report.

  1. Activity on the collection: These include payments, a payment arrangement, or talking to the collector about the debt. This does not restart the reporting time limit for debt collections. It does, however, affect the statute of limitations, which is a different time limit defining the amount of time a collector can sue you for a debt.
  2. Previous late payments: Let’s say you were 30 or 60 days past due on the account in June 2019 but you caught up with payments and paid on time for a few months. You then went late again in December 2019, never got current, and the account was subsequently sent to a collection agency. Those first late payments in June do not affect the date the collection will fall off your credit report because you brought your account into good standing again. (Those late payments have a seven-year reporting limit too, but they will appear with the original account history, not the debt collection.) It’s the second set of late payments that starts the clock for the collection to fall off your credit report.
  3. Date the collection agency took over the account: Throughout the life of your debt collection, different agencies may collect on the account. These may appear on your credit report, but the delinquency date never changes, since it’s based on the original account. If a collection agency reports a different delinquency date, you can dispute the error and possibly even sue the collection agency for violating federal law.
  4. The date the account was opened: Unless it’s the case that you opened the account and never made a payment, or it’s a medical debt in which you were billed the same day you received services.
  5. The date the account was closed: Whether you close the account or it’s closed when sent to collections, this date does not impact the clock for your credit report.
  6. The date the account was settled: If it takes you two years after the original delinquency to pay off the debt, you still have only five years left before the debt collection leaves your credit report.

Remember that the collection reporting time limit is based on the original date of delinquency that led to your debt collection and no other dates or activity.

2. Dispute the Collection If You Found An Error

If the goodwill letter falls flat and the debt collection remains on your credit report, it’s time for a more advanced method.

For this, you will need a current copy of your most recent credit report. TransUnion, Experian, and Equifax provide you with a free credit report once a year. You can also apply for a free weekly credit report on AnnualCreditReport.com.

Once you have your credit reports, find any negative items you’d like removed and make note of them.

Confirm all the details and if you see anything inaccurate, report the inaccurate information to the major credit reporting agencies.

The Fair Credit Reporting Act (FCRA) requires credit reporting agencies to show only accurate information about your credit history.

If you can find inaccurate information, the credit bureau will have to fix the information. Though, if it can’t fix the errors, the bureau should remove the collections from your credit report.

This method can work because, rather than simply disputing the entire entry, you are going to write an advanced dispute letter that lists especially what is inaccurate.

Using this letter, you will insist that each piece of information is corrected or that the collection be removed.

This makes it more difficult for the credit agencies to verify the collection and hopefully results in them simply removing the collection altogether.

ITEMS ON THE COLLECTION ENTRY TO CHECK FOR INACCURACIES:

  • Balance
  • Account number
  • Date opened
  • Date closed
  • Account status (e.g., Closed)
  • Payment status (e.g., Collection)
  • Payment history
  • Delinquency date
  • Credit limit
  • High balance
  • Addresses
  • Anything else that appears to be inaccurate

Frequently Asked Questions

What is a collection on your credit reports?

A collection account is created when a debt you’ve failed to repay is transferred to a collection agency. You’re still on the hook for paying the debt once it’s sold, but you typically have to pay the collection agency instead of the original creditor.

Debts aren’t usually turned over to collections the moment you make a late payment, but the time between your first missed payment and the transfer can vary. It may take several months, it may happen immediately, or it may never happen at all, depending on the creditor.

Once the debt has been turned over to collections, it’s generally reported to the credit bureaus. It’ll then appear on your credit reports and, as a result, damage your credit scores until it’s removed.

Can you remove a collection from your credit reports without paying?

Technically, the answer is yes. It’s unlikely, though.

There are a few ways you could try. They’re essentially the same steps you’d take to request a paid account be removed:

  • File a dispute with the credit bureau and/or ask the collection agency to validate the debt if you believe the collection account is inaccurate.
  • If the account is legitimate but you’ve paid some of it and/or have exhibited responsible behavior otherwise, send the collection agency a goodwill letter requesting the unpaid collection be removed from your reports.

If the above routes fail, you’re probably out of luck. And remember that even if a collection account is removed from your credit reports, you’re still liable for the debt.

Collection agencies don’t always play by the rules

Collection agencies can sometimes be pushy, and some may even violate the Fair Debt Collection Practices Act, which prohibits debt collectors from using abusive or deceptive practices in an attempt to collect from you.

If you suspect you’re being harassed or treated unfairly, it’s important to know your legal rights. We recommend consulting with a legal professional as a matter of course, but you can start by checking out our guide to your debt collection rights.

Can you dispute a collection with the credit bureaus?

You can absolutely dispute a collection if you think it’s erroneous. Formal disputes must be filed individually with each credit bureau and can usually be done online through each credit bureau’s website. You should also dispute the information with the company that provided the information.

Credit Karma’s Direct Dispute™ feature can help you dispute errors on your TransUnion® credit report. We can also help you file a dispute with Equifax directly if you see an error on your Equifax® credit report.

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