When Do Debt Collections Fall Off Your Credit Report?
Any type of financial account can be sent to a collection agency if you become delinquent on the payments. When an account goes to collections, it will typically also be listed on your credit report and used to calculate your credit score. Unfortunately, debt collections bring down your credit score and can continue to affect your score even after you pay off the balance.
The good news is that some newer versions of credit scoring calculations don’t consider debt collections under $100 and don’t ding you as much for medical debt collections. Even so, these blemishes can follow you around for years, hurting your ability to get approved for new credit cards, loans, and other credit-based services.
Thankfully, debt collections won’t be on your credit report forever. The Fair Credit Reporting Act requires that debt collections fall off your credit report after seven years. If you have a judgment resulting from a debt collection, the unpaid judgment can remain on your credit report until the statute of limitations for your state runs out. That's if the statute of limitations is longer than seven years.
When Does the Reporting Time Limit Start?
The credit reporting time period for debt collections starts from the date of the delinquency that caused the collection. With collections resulting from a charge-off, it starts the date the account was charged-off (not on the date of the first 30-day late payment preceding the charge-off). So, if you were first late in February 2013 and the account was charged off in July 2013, the account should fall off after July 2020.
The credit reporting time limit for debt collections is based on your delinquency with the original creditor, not when the debt collector started collecting on the debt. Some versions of your credit report may include phrasing that indicates when the collection will fall off your credit report, e.g. “…scheduled to report until 06/2019.”
When Will a Paid Collection Fall Off Your Credit Report?
While it’s better to pay off a debt collection, unfortunately, payment doesn’t remove the account from your credit report unless you negotiate beforehand to have the account removed with payment. Unless you negotiate a pay for delete agreement, the collection will stay on your credit report for the entire credit reporting time limit and the balance due will be updated to $0. A paid collection will be better for your credit score and will look better when you apply for new credit.
Six Misconceptions About When Collections Will Fall Off
There are some common misconceptions about what affects the date a collection will fall off your credit report. Remember that the collection reporting time limit is based on the delinquency that led to your debt collection and no other dates or activity.
- Activity on the collection, like a payment, a payment arrangement, or talking to the collector about the debt. This does not restart the reporting time limit for debt collections. It does, however, affect the statute of limitations which is a different time limit affecting the amount of time a collector can sue you for a debt.
- Previous late payments. Let’s say you were 30 or 60 days past due on the account in June 2014 but you caught up with payments and paid on time for a few months. You then you went late again in December 2014, never got current, and the account was subsequently sent to a collection agency. Those first late payments in June do not affect the date the collection will fall off your credit report because you brought your account into good standing again. (Those late payments have a seven-year reporting limit too, but they will appear with the original account history, not the debt collection.) It’s the second set of late payments that starts the time period for the collection to fall off your credit report.
- Date the collection agency took over the account. Throughout the life of your debt collection, different agencies may collect on the account. These may appear on your credit report, but the delinquency date never changes since it's based on when the original account. If a collection agency reports a different delinquency date, you can dispute the error and possibly even sue the collection agency for violating Federal law.
- The date the account was opened, unless you opened the account and never made a payment. This can also be the case for things like medical debt where you’re billed the same day you receive services.
- The date the account was closed has no impact on when a collection will fall off your credit report.
- The date the account was settled also does not change the date the collection will be removed.
If you're wondering when a specific collection account will fall off your credit report, pull a copy of your report. You can get a free one from annualcreditreport.com if you haven't already this year. Review the history for the original account to check the date of delinquency and add seven years to that date. That's about when you can expect the collection account to drop off.