Can You Remove Collections from Your Credit Report?

When a borrower fails to make payments on a debt for several months, the creditor or lender may move the account to a third-party collection agency or sell it off to a debt buyer. The collection agency will then pursue the borrower for all or part of the debt, in accordance with the Fair Debt Collection Practices Act (FDCPA) – federal guidelines enacted to protect consumers from “abusive, deceptive, and unfair debt collection practices.”¹

With timely payments, this won’t happen to you. But if it does, be aware that a debt typically won’t be turned over to collections until 120 days to six months after the delinquency begins, and usually only after the creditor or lender has made multiple attempts to contact you directly by mail or by phone.²

Once an account gets transferred to collections, that establishes a new collection account on your credit report. Meanwhile, the late payment is reported as an adverse item under your credit account information.²

An exception is medical debt in collections. As of July 1, 2022, the credit bureaus must wait a full year before reporting unpaid medical debt in collections – and paid medical collection debt will no longer appear on credit reports.³ These changes came about as a way to address the extended time often required to sort out insurance and billing issues.

Collection accounts may remain on your credit report for up to seven years from the date the original debt went delinquent.² In other words, the clock doesn’t “reset” when the debt is turned over to a collection agency.

For example, if your last on-time payment was made on January 1 and your original creditor sent your debt to a collection agency after 90 days, the clock would start ticking in January – not April.

Even if you pay off the collection account before the seven-year period is up, it can remain on your credit report. However, it might have less of an impact on your credit score over time.²

There’s peace of mind in knowing that you have paid off a collection account. But unless the debt is medical collection debt, it still sits on your credit report, and it likely will stay there for up to seven years. Unfortunately, while FICO Score 9 and 10 and VantageScore 3.0 and 4.0 models no longer factor paid collections into credit scores, credit bureaus legally cannot delete accurate or verifiable information until it is at least seven years old.^2,4 The only thing you can do is wait it out. The good news is that the deeper you get into the seven-year run, the less one ding will factor into your payment history.

Mistakes happen, so if a debt in collections erroneously appears on your credit report, there’s no reason for you to incur any adverse effects. If you spot a collections account on your credit report and think it’s a mistake, the Fair Credit Reporting Act (FCRA) allows for you to dispute the error.5 To do so, take the following steps: