How Long Does a Collections Account Stay on Your Credit Report?

Dealing with debt is stressful enough, but the lingering consequences of falling behind on payments can continue to affect you long after the bills have been turned over to collections. One of the most common questions people have when trying to repair their financial lives is how long a collections account will remain on their credit report.

The answer is important because it affects your ability to get approved for loans, rent an apartment, or even land a job. Understanding the rules that govern collections reporting, as well as your rights when it comes to creditor behavior, is key to taking back control of your financial future.

The Seven-Year Rule for Collections Accounts

In most cases, a collections account will stay on your credit report for seven years from the date of the original delinquency. This is the date when you first missed a payment and failed to bring the account current. That seven-year clock does not restart if the account is sold to a third-party debt buyer or if the collection agency updates the account. Even if the debt is eventually paid in full, the collection account may still remain visible on your credit report for the full seven-year period.

This rule is governed by the Fair Credit Reporting Act (FCRA), which sets the guidelines for what can appear on consumer credit reports and for how long. The goal is to balance the need for accurate credit history with a fair opportunity for consumers to recover from financial hardships over time.

Paid vs. Unpaid Collections: Does It Matter?

Paying off a collections account will not automatically remove it from your credit report, but it can still be beneficial. Some newer credit scoring models, like FICO 9 and VantageScore 3.0 and 4.0, do not factor paid collections accounts into your score. However, older models that are still widely used by lenders might still weigh paid collections negatively, although generally less so than unpaid ones.

Paying off a collections account can also prevent the collector from pursuing legal action, reporting the debt to additional credit bureaus, or continuing aggressive collection tactics. If you’re considering whether to pay a collections account, it’s worth consulting with experienced Los Angeles creditor harassment lawyers to understand how doing so may affect your credit, and whether you have options to negotiate or dispute the debt.

What Happens When a Debt Is Sold?

Many consumers are surprised to find multiple entries for the same debt on their credit report. This can happen when the original creditor charges off the debt and sells it to a third-party debt buyer. The original account may be listed as charged off, while a new entry appears from the collection agency.

Even if the debt is sold multiple times, each collector may report the debt to the credit bureaus, though the date of first delinquency remains the same. This date is critical because it ensures that the debt cannot be reported indefinitely. No matter how many times the debt is resold, it must fall off your credit report seven years from the date of the original default.

Disputing Inaccurate Collection Accounts

Errors in credit reporting are unfortunately common, especially when debts are transferred between companies. Collection agencies may report inaccurate balances, incorrect dates, or debts that you’ve already paid. Under the FCRA, you have the right to dispute inaccurate or incomplete information on your credit report. The credit bureau must investigate and correct or delete any information it cannot verify within 30 days.

In some cases, particularly where a debt buyer is involved, the company may not have sufficient documentation to prove that the debt is valid. If they cannot verify the debt, it must be removed from your credit file. Working with legal counsel can make this process more effective, especially if you’re dealing with debt collectors who refuse to comply with the law.

What If You’re Being Harassed Over Old Debt?

If you are receiving calls or letters about a debt that is close to, or past, the reporting limit, it’s critical to know your rights. Just because a debt can no longer appear on your credit report doesn’t mean a collector will stop trying to collect. Some debt buyers attempt to revive old debts through deceptive tactics, including asking you to make a small payment that could restart the statute of limitations.

Federal law protects you from these practices. If a debt collector is threatening you, contacting you at work, or calling repeatedly at odd hours, you may have a legal claim under the Fair Debt Collection Practices Act (FDCPA). The experienced Los Angeles creditor harassment lawyers at Wadhwani & Shanfeld can help you understand your options and assert your rights.

Contact Wadhwani & Shanfeld

If a collections account is negatively affecting your credit or you’re being harassed by debt collectors, you don’t have to face it alone. At Wadhwani & Shanfeld, our attorneys have helped thousands of Californians overcome debt challenges through strategic legal guidance, debt negotiation, and bankruptcy protection.

We’re here to advocate for your rights and help you move forward. Contact us today for a free consultation and start taking control of your financial future.

Sources:

Consumer Financial Protection Bureau, Fair Credit Reporting Act (FCRA)

Federal Trade Commission

Experian

Equifax

TransUnion