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When Do Collections Fall Off Your Credit Report?

    

SUMMARY: Learn about the impact of collection accounts on your credit report, how long they affect your credit score, and ways to have them removed from your credit history.

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When you neglect to pay a credit card, medical, or another type of bill, your account may be turned over to collections. Typically, when an account is unpaid for 90 – 180 days or more, the original company that is owed the money sells the debt to a collection agency, causing a collection account to appear on your credit report. While you may be tempted to ignore it, don’t. It’s imperative that you deal with the matter right away.

In this post, we’ll talk about how to deal with a collection account, how long it impacts your credit, and how to have a collection account removed from your credit report.

How Do Collection Accounts Affect Your Credit?

A collection account is near the top of the list of items that are bad for your credit score, but the good news is the impact becomes less over time. Older collection accounts have a less negative impact on your credit than more recent ones. The types of collection accounts you have may affect your score differently as well. For example, in some credit scoring models, an unpaid medical bill will have less of an impact on your credit score than other types of bills. Similarly, if you have only one account in collections, you may be more attractive to lenders than someone with multiple collection accounts on their credit report.

How Long Are Collections on a Credit Report?

Unfortunately, collection accounts can stay on your credit report for up to seven years, plus 180 days from the date that the debt became past due. After this time, we say that they “fall off,”  meaning they are no longer visible to anyone checking your credit score or credit history.  This is a good incentive to pay all of your bills on time and check your credit report frequently to make sure there is no inaccurate information.

How to Remove Collections from Your Credit Report.

If you have a collection account on your report, there may be a few ways to resolve it and restore your credit. First, determine if the debt is actually yours. If you find it was reported in error, file a dispute to have it removed from your credit report.

If you determine that your credit report is accurate, begin by calling the collection agency. If you have already paid the debt off, ask them to have it removed from your credit. While this doesn’t always work, it never hurts to ask. If you have not yet paid off your debt, try to negotiate with the debt collector. They may be willing to remove the account or update it to “paid as agreed upon,” once you have paid the debt in full. Just be sure to get the agreement in writing before you take any action.

Finding out that you have collection accounts on your credit report can be stressful, but there are steps to take to correct the problem and help improve your credit score so you can qualify for a better rate on a credit card, mortgage, or personal loan

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Sources:

https://www.forbes.com/advisor/credit-score/how-to-remove-collections-from-credit-report/

https://www.nerdwallet.com/article/finance/debt-collection-credit-report

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