How Long Does It Take for a Collection to Be Removed After Payment?
Understand how paying a collection impacts its status on your credit report. Learn its typical duration and how to ensure accurate reporting.
When a debt remains unpaid, the original creditor may transfer or sell the account to a collection agency. This becomes a collection account on a consumer’s credit report. Collection accounts are derogatory marks that negatively affect creditworthiness. This article clarifies what happens to a collection account on a credit report after it has been paid.
Understanding Collection Reporting After Payment
Paying a collection account typically updates its status on a credit report to “paid” or “satisfied,” but the account itself usually remains. The Fair Credit Reporting Act (FCRA) dictates that most negative information, including collection accounts, can remain on a credit report for up to seven years. This seven-year period begins from the date of the original delinquency, which is the first missed payment that led to the account going into collections, not the date the collection agency acquired the debt or the date it was paid. The account remains on the credit report as a historical record, even after payment. The negative effect of collections and missed payments on a credit score tends to lessen over time.
A “pay-for-delete” agreement is an exception where removal might occur, though these arrangements are rare. This involves negotiating with the collection agency to remove the account entirely from the credit report in exchange for payment. Credit bureaus and the FCRA do not officially endorse this practice, as it can compromise the accuracy and integrity of credit reporting.
Confirming Payment and Credit Report Updates
After paying a collection account, obtain written confirmation of payment from the collection agency. This confirmation should include the date of payment, the amount paid, and a statement that the debt is considered settled. This documentation serves as proof of payment.
Consumers should then obtain a free copy of their credit report from each of the three major credit bureaus: Experian, Equifax, and TransUnion. The official source for free credit reports is AnnualCreditReport.com, which provides one free copy from each bureau annually and currently offers weekly access. When reviewing the credit report, check the collection account’s status to ensure it has changed from “unpaid” to “paid” or “satisfied.” It typically takes 30 to 45 days for collection agencies to report payment and for credit bureaus to update the information on a credit report.
Disputing Inaccurate Collection Information
If a collection account on a credit report is not updated correctly or still shows as unpaid after a reasonable waiting period, a consumer should dispute the inaccurate information directly with the credit bureaus. Disputes can typically be filed online, by mail, or by phone.
When filing a dispute, provide detailed information and supporting documentation. This includes personal identification, specific details of the inaccurate entry, and the payment confirmation from the collection agency. Submitting copies of documents, rather than originals, is advisable.
Upon receiving a dispute, the credit bureau is required by the FCRA to investigate the claim, usually within 30 to 45 days. The bureau will contact the data furnisher (the collection agency) to verify the information. If the information is found to be inaccurate or unverifiable, it must be removed or corrected from the credit report.