How Long Does a Collection Stay on my Credit Report?

collections

If you have found yourself failing to pay your credit card or medical bills, chances are you may get a collection account stated on your latest credit report. What does this mean? Would this affect your credit score? More importantly, how do you fix this potential problem?

 

Here are some tips how you can resolve any collection records on your credit report.

 

Debt Collections

 

First of all, you should know that debt collections appear in various forms, including an unpaid cellphone bill, a forgotten medical bill, or even a book from the library that you forgot to return. Whatever forms they come, all collections will impair your ability to get credit.

 

Once your unpaid debt gets included on your credit report, there is a high possibility that your credit score will see a huge drop, which could be as high as 100 points.

 

Collections and Credit Reports

 

Accounts that have been transferred to collections will typically be included on the credit report of a person for seven years.  If you are unsure if you have collections on your credit report you can check here.

 

If you happen to find yourself in this situation, you may have problems getting new credit cards, mortgages, auto loans, or anything else requiring a credit check. The worst part of it all, even if you succeeded in getting a loan, there is a high possibility you would have to pay a bigger interest rate primarily because you have damaged credit.

 

For the longest time, medical collections have been treated equally with other collections. But in 2014, FICO updated its scoring, treating medical collections apart from the others. That’s why these days, medical collections carry less weight in your calculated score.

 

This does not mean however that a medical collection would not impair your chances of getting a loan. In most cases, lenders do not just evaluate the credit score of applicants when making their own loan decisions. They usually look at your entire credit report and scrutinize your past negative items. This is particularly true when somebody is trying to get a mortgage loan.

 

Removing Collections from Credit Report

 

Removing collections from your credit report may be a bit burdensome, but it would not certainly hurt you to try. After all, we are talking about your capacity to apply for loans and pay lower interest rates.

 

Here are some things you can do that might work in removing collections from your credit report.

 

  1. Ask the collection agency for a goodwill adjustment

 

One thing you could try is mail or get in touch with the collection agency and ask for a “goodwill letter”. A “goodwill letter” is a letter that explains the situation you are in. This is where you can explain that you want to buy a house or need a loan for some reason but due to the collection indicated on your credit report, you are hampered from doing so. You can explain why you are hoping the agency can remove the collection on your credit report out of goodwill.

 

This may sound like you are shooting from the stars, but you would be surprised this works well in some cases.

 

  1. Scrutinize the collection

 

Check the collection listed on your credit report and vet the information listed. If there is anything questionable or inaccurate, make sure you note it. This is better than merely disputing the entire entry, since you can make a comprehensive dispute letter that would particularly detail what items are inaccurate if at all.

 

Here are the following items you might want to check on your collection entry for possible concerns or inaccuracies:

 

  • Balance
  • Account status
  • Date opened as well as the date closed
  • Account number
  • Status of payment
  • Credit limit
  • Any item that appears questionable or inaccurate

 

After noting the possible inaccuracies that you may have found on the collection, you can use a letter to demand that each and every piece of information there must be corrected or else the entire correction must be removed. This can make it hard for the credit agencies to vet the collection listed, and hopefully prompt them in simply removing the entire thing altogether.

 

  1. Demand to validate the debt

 

You can also write and demand the collection agency it validate your debt. This can be your option if you did not find any inaccuracies or questionable items on the correction entry. Under law, collection agencies are needed to validate the debts they are seeking to collect if consumer request they should do as such.

 

The only problem here is that you have only 30 days or about a month to make that request to the agency after it made its initial contact to you. If they are having a hard time validating your debt, then you can ask the company to remove the debt from your credit report.

 

 

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