What exactly are collections on my credit report?

Collections on a credit report come from a third party that isn’t your lender. This is because an unpaid debt has been sold to a debt collections agency who will attempt to collect the debt. Any type of debt can be sold to a collections company: medical bills, charged-off credit debts, and even unpaid household bills.

Collections can be confusing. But understanding a few basic things about them can help you navigate collections successfully.

What does a collections account mean on a credit report?

A collection account on a credit report means that a lender sold the rights to collect on an unpaid debt to a third party, usually known as a collection agency.

Because a collections represents a failure to pay a bill, an account recently put into collections can have a significant impact on your credit score.

How are collections shown on a credit report?

Collections accounts have their own section in a credit report — usually at the top. They will show: 

  • Name of the collection agency
  • Current balance
  • Original balance
  • Pay status
  • Original creditor (If you are unsure about the debt this is who you should reach out to for debt verification)
  • Date first reported / Date placed in collections (this is not the same as the date of first delinquency)
  • Date closed
  • Updated date

How long does a collection stay on my credit report?

A collection account will stay on your credit report for about seven and a half years from the date the account became past due.

Per the Fair Credit Reporting Act (FCRA), an account placed for collection that is older than 7 years from the date of when the report was pulled must be removed from the person’s file. Once an account is sent to collections, a 180-day “running of reporting” period is triggered from the date of delinquency, or the date at which the account was deemed unrecoverable. The mandatory 7 years begins after the 180-day period.

Here’s an example:

  • Original due date:  5/1/2019
  • Date of first delinquency:  5/2/2019
  • Expiration of 180 Window: 10/29/2019
  • Last date of appearance on credit report:  10/28/2026There is no rule for how long a collection must stay on the report, just that it can’t remain on a credit report after seven years.  

Doesn’t “last activity” mean that a collection can stay on my credit for longer than seven years?

Some believe that a collection can remain on a credit report for 7 years starting with the “last activity.” “Last activity” could be a partial or full payment. In fact, activity on a collections doesn’t restart the clock on how long a collection will stay on your credit report — at least it shouldn’t. Some disreputable collection companies may attempt to re-post collections as a new debt to restart the clock, but this is an illegal and uncommon practice. Disputing this as an error on your credit report should correct the problem.  Check out the Ultimate Guide to Credit Repair to learn more.

The “last activity” will not reset the 7-year clock on a collection, but it is often the basis for when legal action (such as a lawsuit) either can or cannot be established. “Last activity” often starts the clock on the statute of limitations on a lawsuit. However, the details of this vary by state. If you are unsure about your rights, you should contact an attorney to review the details of your specific case.

How can I remove a valid collections accounts from my credit report?

You have two ways of removing a valid collection account from your credit report for good:

First, pay the collection account debt. You should negotiate with the agency to see if they will accept less than the full amount. Once the collection account is paid, it is no longer factored into some new credit scores, including VantageScore 3.0 and 4.0 as well as FICO scores 9 and 10, even if you negotiated a reduced payment. Some collections agencies will remove paid collections entirely from their credit bureau reporting, but you may need to negotiate this with them prior to paying the debt.

The second option is to let a collection account “age off” of your credit report. A debt can only be included on your credit report for about seven and a half years after the date of first delinquency. That is the first day the debt became past due leading up to the collection. Note: this is not the same as when a debt can be collected or when you can be sued for the debt.

Can I dispute valid collection accounts to have them removed from my credit report?

Many credit repair organizations imply that they can help you remove valid collection accounts from your credit report. The reality is that it is highly unlikely. It is almost always a waste of time and money to attempt to change accurate information on a credit report. A strong paper trail often supports accurate information, which is difficult to dispute.

If there is a genuine error, though, you should absolutely dispute the error and should be able to have it removed.  Check out the tutorial on how to do this yourself.

Do collections on medical debt affect my credit score?

A medical collection account will likely hurt your credit score. However, newer credit scores including VantageScore 4.0 and FICO 10 differentiate between medical and non-medical collections and treat them differently. More importantly, the three main credit bureaus apply a 180-day waiting period before they add medical collections to your credit report.

The three big credit bureaus announced that as of July 1, 2022, medical collections that have been paid will be removed from a credit report. So, even if a medical debt was sent to collections—as long as it is paid off—it will be removed immediately from your credit report. It will not remain on your file for 7 years, like other collections.

What order should I payoff my collections?

If you have multiple collections accounts, you may want a strategy for how to pay them off.  You may consider the following:

The statute of limitations

Are any of your current collections outside of the statute of limitations in your state?  If so, you might consider deprioritizing that debt, but you should consult an attorney first. 

Debt collector cooperation

Which debt collector is willing to give you the biggest reduction in amount owed?  Many collection agencies will settle (i.e., bring your balance to $0) for less than the amount owed. Sometimes much less. If you are limited in the amount you are able to pay, you can consider looking for who will give you be best discount.

Age of the collection

All other things being equal, paying off the most recent collection account first will usually improve your credit score the most. However, the improvement may be minimal until all collections have been settled.