How much does having a collection on my credit report affect my credit score?

Without a doubt, having an account in collections on your credit report will affect your credit score. Credit scores are meant to give the likelihood of a person defaulting on a credit obligation within the next two years. Having a collection account would be a strong indicator that a person is struggling with their current debt load.

So, how much does the collection affect a person’s credit score? We divided the data into two simple groups, those credit files with at least one collection account on their credit report and those who don’t have any. Typically, those with a collection account had credit scores that were almost 200 points worse than those who didn’t.

Graph showing the impact of having an account in collections has on your credit score
This graph shows the impact of collections with on-time payments

Of course, people who have a collection are more likely to have other problems present on their credit report which also affect their scores, so not all of that 200-point difference is attributable to collection accounts. However, it does show that having a collection on your credit report will dramatically impact your score.

If we only include people who have made at least 6 months of on-time payments the impact of collections is a little less pronounced with only a 120-point difference.

Do all collections impact my credit score the same?

Given the complexity of the credit scoring process, it shouldn’t come as a surprise that not all collection accounts will weigh equally on your credit score.

While the direct, numerical impact to one’s credit score is impossible to identify, there are some broad principles: 

  • Old collections accounts are less impactful than new ones. 
  • Low dollar collections accounts are less impactful than high dollar ones. 
  • Non-medical collections are less impactful than medical (newer credit scores only).

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Do older collections affect my score just as much as recent ones?

New collections are worse than those that have aged. However, even after 1 year, collections are still harmful to a credit score. Individuals that have a collection account that appeared on a credit report within the past three months will typically have credit scores that are 30 points lower than individuals whose account(s) in collection is one to two years old.

Does the amount due on a collection account matter?

The amount of the collections account matters when it comes to your credit score, but probably not as much as you think. A $5,000 collection account is not 10 times as impactful as $500. While less is better when it comes to the amounts owed, just having an unpaid debt is the most impactful factor. You should not expect a huge increase in your credit score by making a payment to a collection account that doesn’t pay the full balance in collections. 

Looking across a broad group of credit scores, we do see that individuals who have at least $1500 in collections due typically saw scores that were 35 points worse than individuals who had collection accounts owing less than $500.

Graph showing the impact that the dollar amount in collections has on a credit score

Does having multiple collection accounts affect a credit score more than just having one?

Having more than one collection account is worse than having only one. That is because multiple collections show a pattern of non-payment. However, removing only one collection account when you have more than one may not generate a large improvement for your credit score. That is, the biggest credit score improvement will likely come from removing all collections from your credit report. 

People with five or more collection accounts typically see only a 25-point difference in their credit scores compared to those with only one collection account.

Collections can really drag down a credit score, even if they seem small and inconsequential. Working to remove collections from your credit report can be one of the most important things you can do to improve your credit score.

Chart showing the impact of having multiple accounts in collections has on your credit score.