What Happens to My Credit Score If I Start Paying a Collection?
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Payment history makes up about 35 percent of your credit history, and paying your bills in full and on time is positive for both your credit history and your credit score. On the other hand, one delinquent payment that is just 30 days late will remain on your credit report for up to seven years from the date of last activity.
After some period of negative behavior on one of your credit accounts, such as delinquent payments or a charge-off, your debt may be sold to an outside collection agency. If this happens, it’s to your benefit to pay off the collection, thereby satisfying your commitment.
How long will a collection account remain on your credit report?
In general, a collection account will remain on your credit report for up to seven years plus 180 days from the date the account first became past due. The countdown to the account falling off your credit report begins 180 days after the start of the delinquency that led to the collection.
For current residents of the state of New York, paid collections will remain on your credit file for only five years. All unpaid collections from the state of New York will remain on file for the full seven years.
If you have an account in collections, consider creating a budget to pay off the debt as quickly as possible. While an account that wound up in collections will remain charged off, paying off a collection can still reflect positively on your credit history.
When you apply for a mortgage or other loans, for example, lenders may see that you have paid off a collection and satisfied the debt, and they may take that payment behavior into consideration.
The amount of time a collection remains on your credit report, though, will not change as you start to pay off the collection account.
Adding a consumer statement regarding a collection account
If an account that you have paid off in full is still listed in collections on your credit report, you can add a brief consumer statement—up to 100 words, or 200 words if you live in Maine—explaining that you have satisfied the debt. The statement will become part of your credit report and will be included each time the report is accessed.
You can also add a consumer statement if you disputed a collection listed on your credit report and the resulting investigation did not resolve the dispute to your satisfaction. Your statement can be added, free of charge, to your Equifax credit file online. You can also send your information in writing to:
Equifax Consumer Services LLC
PO Box 740256
Atlanta, Georgia 30374-0256
Once your collection account has a balance of zero, it is considered paid in full and it is not necessary for the creditor to make a note that you have satisfied the debt.
Filing a dispute
If you spot any errors in your credit report—for example, a paid bill marked as unpaid—you can file a dispute with the credit reporting agency. A creditor may have failed to report a payment, or you may never have received a bill that was eventually sent to collections.
At Equifax, you can file a dispute online, by phone, or by mail. You can also contact the creditor directly in order to resolve the error.
Diane Moogalian is vice president of operations for Equifax Personal Solutions with responsibility for operational strategy and execution in support of customer care and fulfillment of credit and identity-related products for consumers. Prior to joining Equifax in 2007, Diane held several strategic roles with leading financial services companies. Diane graduated from the University of Richmond with a bachelor of science degree in business administration (marketing and economics) and earned a certificate in international business from Virginia Commonwealth University.
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