In this article:
- What to Do When You Find Out Your Debt Is in Collections
- How Long Will Collections Stay on My Credit Report?
- Should I Dispute a Collection Account?
- Recovering From Collections
You do not have to notify Experian to remove collections as long as the information is accurately reported and has not expired. Collections generally remain on your credit report for seven years since the date of the first late payment that led to the delinquency. Once those seven years have passed, the collection account should be removed automatically.
What to Do When You Find Out Your Debt Is in Collections
Finding out a debt has gone into collections is never a happy experience. It happens when you've fallen behind in your payments—typically by three monthly payments or more. If this happens to you, both the late or missed payments and a collection account may appear on your credit report, and will likely have a negative effect on your credit score.
If you've been contacted by a debt collector, do everything you can to manage the situation proactively. By learning your rights under the Fair Debt Collection Practices Act and making an honest effort to pay back your debt, you may be able to contain the damage. Bear in mind:
- Before agreeing to anything, request details about the debt in writing.
- You have the right to ask a debt collector to stop contacting you, in writing.
- Ignoring calls from a debt collector won't make your debt go away. You may be able to work with a collector to find a manageable solution. Read up on the debt collection process to get familiar with how it works.
How Long Will Collections Stay on My Credit Report?
A collection account stays on your credit report for seven years after the original delinquency. The original delinquency date is calculated based on when payment on the original account first becomes 30 days past due. Transferral of the debt to another creditor such as a collection agency doesn't reset the timeline for its removal from your credit report.
Once seven years have passed since the original delinquency date, the collection account should drop off your credit report automatically. If both the original debt and the collection account appear on your credit report, they will both be deleted at the same time.
What if You've Paid Off Your Debt?
Although your credit report may still show the collection account, it should show a zero balance, indicating that your account has been paid. This is helpful if you're applying with a lender that requires collections to be paid off prior to closing a loan. Paying off debt may also improve your credit score with some of the newer credit scoring models, such as FICO 9 and VantageScore 3.0 and 4.0. These scoring models ignore collections that have a zero balance, which should provide a lift to your score. Be aware, though, that older scoring models, including those for mortgage lending, don't ignore paid collections and will consider both the collection and the original delinquency in calculating your score.
Should I Dispute a Collection Account?
If the debt and the collection account in question are valid and correct, there's no basis for submitting a dispute. However, if you believe information about the collection is inaccurate, you have the right to dispute your credit report. Find out more information on how to dispute credit report information. Here are three instances when disputing a collection account might make sense:
- The collection account is not yours. If you find a collection account on your credit report for a debt you don't recognize, contact the creditor or submit a dispute with the credit reporting agency that maintains the credit report it appears on. It could be the result of an error or identity theft. Once disputed, the company that reported the collection will investigate and, if it turns out not to be yours, the entry will be removed from your credit report.
- The collection is expired. If more than seven years have passed since the debt originally became delinquent, you can submit a dispute asking to have the entry removed.
- The collection is paid but it shows a balance. If you pay off a debt that is in collections, the collection account on your credit report should show a zero balance. File a dispute if the account continues to show an unpaid balance, since paying off a debt in collections may reflect positively to lenders and on your credit score, and may be a requirement for certain lenders.
Recovering From Collections
Seven years may seem like a long time to carry collections information on your credit report, but while you're waiting for it to expire, focus on managing the collections process, paying off your debt and working on good credit habits. Checking your Experian credit score and free credit report regularly can help you spot any new issues and track your progress.
