How Long Do Collections Stay on Your Credit Report?

Credit reports provide a detailed history of an individual’s financial behavior, serving as a significant factor for lenders, landlords, and even some employers when assessing creditworthiness. These reports contain various entries, both positive and negative, that influence one’s financial standing. Among the negative entries, collection accounts can have a substantial impact, indicating severely delinquent debt. This article clarifies how long collection accounts remain on a credit report and their effect on credit health.

Understanding Collection Accounts

A collection account arises when a debt is not paid according to its original terms, leading the original creditor to either sell the debt to a third-party collection agency or assign it to an in-house collections department. This occurs after a consumer has missed several consecutive payments, after 90 to 180 days of non-payment.

Once a debt is placed with a collection agency, it appears on a credit report as a separate entry, distinct from the original account. This new entry reflects the severely delinquent nature of the debt, serving as a red flag for potential creditors.

The Standard Reporting Period

Collection accounts remain on a consumer’s credit report for seven years, plus an additional 180 days, from the date the account first became delinquent and was never brought current again. This starting point is known as the “original delinquency date.” This is the date of the first missed payment that led to the account being sent to collections, regardless of when the debt was sold or transferred to a collection agency.

The reporting period is fixed by this original delinquency date and does not restart if the debt is sold to a different collection agency or if a payment is made on the collection account. This rule is established under the Fair Credit Reporting Act (FCRA). Paying a collection account does not remove it from the report before the seven-year period ends; instead, its status on the report is updated to “paid collection.”

How Collection Accounts Affect Your Credit

Collection accounts reduce credit scores because payment history is a major component of most credit scoring models, accounting for approximately 35% to 41% of a score. Their presence indicates a failure to meet financial obligations, which signals increased risk to lenders. The severity of the negative impact depends on several factors, including the amount of the debt and its age, with newer and larger collections causing more damage.

While a collection account remains on a credit report, it continues to negatively influence creditworthiness. This can make it more challenging for individuals to obtain new credit, secure loans, or qualify for favorable interest rates. Some newer credit scoring models, such as FICO Score 9 and 10, and VantageScore 3.0 and 4.0, may treat paid collections more favorably or even ignore them, while older models, like FICO 8, may still penalize them regardless of payment status.

After a Collection Account is Removed

Once the seven-year-plus-180-day reporting period has passed, a collection account is automatically removed from credit reports by the credit bureaus. After removal, the item no longer appears on the report and cannot be re-reported by the collection agency. This removal has a positive effect on an individual’s credit report and score, as a negative entry is no longer factored into scoring calculations.

While the collection account is removed from the credit report, the underlying debt may still legally exist. However, the ability of a debt collector to sue for the debt may be limited by state-specific statutes of limitations. The primary benefit of removal is the cessation of its negative impact on credit scores and the ability to secure new credit.