How Long Do Paid Collections Stay On Your Credit Report?

A collection account on a credit report indicates a debt that has become severely delinquent and was sold or assigned to a third-party collection agency. These accounts can significantly affect a consumer’s financial standing, signaling to potential lenders a past inability to manage financial obligations as agreed.

Credit Reporting Timelines for Collection Accounts

Collection accounts generally remain on a consumer’s credit report for a specific period established by law. The Fair Credit Reporting Act (FCRA) dictates that a collection account can be reported for up to seven years plus 180 days from the date of original delinquency (DOFD). The DOFD is the precise point in time when the account first became delinquent and was never subsequently brought current.

This date determines the start of the seven-year reporting clock. For example, if a credit card payment was missed in January 2020 and the account was never made current before being charged off and sent to collections, the DOFD would be January 2020. The collection account would then typically remain on the credit report until July 2027, regardless of any later action.

Impact of Paying a Collection Account

Paying a collection account changes its status on a credit report, but it does not remove the entry prematurely. While the underlying debt may be satisfied, the record of the collection and its original delinquency remains on the credit report for the full seven-year plus 180-day period from the date of original delinquency. The status will update from “unpaid” to “paid,” “settled,” or “paid in full,” reflecting the resolution of the debt. Lenders view a paid collection account more favorably than an unpaid one, influencing future credit decisions.

The specific language on the report may vary depending on the agreement reached with the collection agency. An account marked “paid in full” indicates the entire original balance was satisfied, while “settled for less than the full amount” means a reduced sum was accepted as complete payment. Both statuses show resolution, but “paid in full” may be perceived slightly more positively by some creditors. Obtaining written confirmation from the collection agency detailing the payment and the agreement reached is an important step. This documentation serves as proof of payment and can be used if any discrepancies arise on the credit report.

Monitoring Your Credit Report After Payment

After paying a collection account, actively monitoring your credit report is an important step to ensure accuracy. Consumers are entitled to a free copy of their credit report from each of the three major credit bureaus—Equifax, Experian, and TransUnion—once every 12 months through AnnualCreditReport.com. These reports should be reviewed carefully to confirm the collection account’s status has been updated to reflect the payment. Look for terms like “paid,” “settled,” or a zero balance, which indicate the account is no longer outstanding.

If the credit report does not accurately reflect the payment or if the account remains on the report beyond the legal reporting period, consumers have the right to dispute the information. The dispute process involves contacting the credit bureau directly, providing details of the inaccuracy, and submitting supporting documentation, such as the written confirmation of payment from the collection agency. The credit bureau is then required to investigate the dispute and correct any verified errors.