When Do Collections Fall Off Your Credit Report?
Learn how long collection accounts stay on your credit report, their effect on your score, and how to ensure accuracy.
A collection account on a credit report signifies a debt unpaid for an extended period, typically 120 days or more, that has been transferred or sold to a debt collector who then attempts to recover the outstanding amount. The presence of such an account on your credit report alerts potential lenders to a history of missed payments and financial obligations not met as originally agreed.
Understanding the Collection Reporting Period
Collection accounts generally remain on your credit report for a period of seven years. This timeframe is mandated by the Fair Credit Reporting Act (FCRA), a federal law designed to ensure the accuracy, fairness, and privacy of consumer credit information. The starting point for this seven-year clock is not when the debt went to collections or when you last made a payment, but rather the “Date of First Delinquency” (DOFD).
The DOFD refers to the month and year of the first missed payment that led to the account becoming delinquent and not subsequently brought current. For instance, if you miss a payment in June and the account never becomes current again, June would be the DOFD. Even if the account is sold to multiple collection agencies over time, the original DOFD remains the reference point for the seven-year reporting period. This ensures that negative information does not perpetually reset its reporting period simply by being transferred between collectors.
The FCRA specifically states that accounts placed for collection cannot be included on a consumer report after seven years and 180 days from the DOFD. This 180-day grace period is sometimes added to the seven years, providing a slightly longer window for reporting. This rule applies broadly to various types of consumer debts, including credit cards, auto loans, mortgages, utility bills, and medical bills.
Creditors are required to report the DOFD within 90 days of an account being placed for collection or charged off. Accurate reporting of this date helps prevent collection accounts from remaining on credit reports longer than legally permitted. Consumers and regulators closely monitor the DOFD to ensure compliance with federal law.
How Collection Accounts Impact Your Credit
The presence of collection accounts on your credit report can significantly impact your credit scores and your ability to obtain new credit. These accounts signal a higher risk to lenders, as they indicate a past failure to repay debts as agreed. Payment history is a factor in credit scoring models, and collection accounts represent a negative mark within this category.
The exact impact can vary depending on the credit scoring model used and the specifics of the collection account. A newer collection account will have a greater negative effect than an older one, as its influence lessens over time. While paying a collection account may change its status on your credit report to “paid,” it does not remove the account from your report before the seven-year reporting period expires. The account will still be visible, but its status as “paid” may be viewed more favorably by some lenders and newer scoring models.
Some modern credit scoring models, such as FICO Score 9 and VantageScore 3.0 and 4.0, may disregard paid collection accounts or treat them less harshly than older models. However, many lenders still utilize older FICO Score 8, which does not differentiate between paid and unpaid collections for debts over $100. Therefore, while paying a collection helps resolve the debt, it may not instantly improve your credit score on all models. The primary benefit of paying a collection is resolving the underlying debt and potentially improving your standing with specific lenders who consider paid accounts more favorably.
Ensuring Accuracy of Collection Information
Verifying the accuracy of collection accounts listed on your credit report is an important step in managing your financial health. You are entitled to a free copy of your credit report from each of the three major nationwide credit bureaus—Equifax, Experian, and TransUnion—once every 12 months. Regularly reviewing these reports allows you to identify any unfamiliar or incorrect collection entries.
If you discover an inaccurate or unverifiable collection account, you have the right to dispute it with both the credit reporting agencies and the collection agency. When disputing with a credit reporting agency, you should clearly explain what information you believe is inaccurate and provide any supporting documents. Disputes can be submitted online, by mail, or by phone; online is often the fastest method. The credit reporting agency has 30 days to investigate your dispute.
Additionally, you should send a debt validation letter to the collection agency within 30 days of their initial contact if you doubt the debt’s validity or accuracy. This letter requests proof that you owe the debt and that they have the legal right to collect it. If the collection agency cannot verify the debt, or if the information they provided to the credit bureaus is found to be inaccurate, they are required to update or remove that information. Maintain detailed records of all communication and documentation during the dispute process.