How long do collections stay on your credit report?

Overdue accounts that have been reported to collections could stay on credit reports for up to seven years. And having that negative mark on credit reports can also impact your credit scores.

Having debt in collections can be stressful. But understanding how debt collection works, how it may affect your credit and how to rebuild your credit can help you make a plan to move forward.

Key takeaways

• Creditors and lenders may send past-due debt to collections. How late payments must be before the account is sent to collections can vary by creditor or lender, type of debt and more. 
• Debt collection may be done internally by the creditor or lender that’s owed. Or it may be handled by an external debt collector. 
• Collection accounts may appear on credit reports for up to seven years, which can affect credit scores. Unpaid collection accounts may have a more significant negative impact on scores than paid collection accounts. 
• Medical debt that’s sent to collections is treated differently than other types of collection accounts. Paid medical debt, medical collection debt under $500 and medical collection debt less than a year old are not allowed to show up on credit reports. 

According to the Consumer Financial Protection Bureau (CFPB), a “debt collector may be trying to contact you because a creditor believes you are past due on the payments you owe on a debt.”

This may be referred to as sending debt to collections. And debt that’s in collections is sometimes called a collection account. 

Unpaid debt isn’t sent to collections until it’s past due for a certain amount of time. But that time period can vary by creditor, type of debt and more. Some creditors won’t send an account to collections until it’s 30 days past due, for example. Others may send debt to collections when payments are several months overdue.

Creditors typically aren’t required to notify the account holder before sending debt to collections. But according to the CFPB, the creditor may try to collect the debt themselves. If they’re unsuccessful, they may then send the account to an external debt collection agency or lawyer. Creditors may also sell unpaid debt to a debt collection company.

If you’re having trouble paying your bills, the CFPB recommends contacting your creditor or lender as soon as possible. Creditors may be willing to work with you to adjust your payment during a financial emergency, according to the CFPB. There are also credit counseling services that may be able to help. 

The creditor that owns the overdue debt may have an internal team of debt collectors. Debt collectors may also include independent lawyers, debt collection agencies or companies that buy past-due debts. 

It’s important to note that debt collectors have to follow regulations set by the Fair Debt Collection Practices Act, including rules about how and when they’re allowed to contact you. For example, debt collectors can only contact you between 8 a.m. and 9 p.m. unless you agree otherwise. And they can’t harass or threaten you. 

Debt collectors also have to give you certain information within five days of contacting you for the first time. That includes their name and mailing address, the creditor, how much you owe, and your rights.

Having debt in collections may lower your credit scores. The late or missed payments that caused the account to be sent to collections may also impact your scores. 

Collection accounts, and other derogatory marks, can stay on your credit reports for up to seven years, according to the CFPB. This applies to collections that are paid or unpaid. But it’s worth noting that paid collection accounts may not affect your credit scores in the same way that unpaid collection accounts might. 

According to Experian®, one of the three major credit bureaus, recent versions of the FICO® and VantageScore® credit scoring models consider unpaid and paid collection accounts differently. Unpaid collections may negatively impact your score. But for these models, paid collection accounts do not. 

When it comes to medical debt collections, different rules apply. Paid medical debt, medical collection debt under $500 and medical collection debt less than a year old are not allowed to appear on your credit reports. 

If you find an error on your credit reports, the CFPB recommends disputing it with the credit reporting company. The CFPB also says that if you’re having trouble paying medical bills, you might qualify for financial assistance programs. 

You have the right to dispute errors on your credit reports. If you believe you’ve found inaccurate information on your report, the CFPB recommends starting by contacting the credit reporting bureau that produced the report containing the error. The three major credit reporting bureaus are Experian, Equifax® and TransUnion®. 

You may also need to contact the company or person that reported the inaccurate information. The CFPB has more information on how to contact the bureaus and what information you may need to provide.

There isn’t a magic formula for improving your credit scores. But there are some healthy credit habits that may help you rebuild your credit with responsible use over time.

• Pay your bills on time. Missed or late payments can impact your credit scores and incur late fees. Setting up automatic payments may help you avoid late payments. 
• Don’t get too close to your credit limits. A credit utilization ratio is a measure of how much of your available credit you’re using across all accounts. The CFPB recommends keeping this ratio under 30%. 
• Limit new credit applications. Applying for new credit typically involves a hard inquiry, which can affect your credit scores. The CFPB recommends limiting hard inquiries and only applying for the credit you need. 
• Monitor your credit. Monitoring your credit can help you track your progress and spot any errors in your credit reports. One way to keep an eye on your credit is with CreditWise from CapitalOne. With CreditWise, you can access your TransUnion credit report and VantageScore 3.0 credit score without hurting your credit scores. Plus, it’s free for everyone, whether you’re a Capital One customer or not. 

Rebuilding credit and improving your scores takes time. And the CFPB warns that companies promising to repair your credit scores quickly may be scams. 

Some warning signs of a credit repair scam include a company that asks you to pay before receiving any services, guarantees a specific credit score increase or promises to get rid of accurate negative information on your credit reports. 

But there are reputable credit counseling services that can help. The U.S. Department of Justice has a list of approved credit counseling agencies to help you get started.

Collection accounts may stay on your credit report for up to seven years, which may impact your credit scores. But there are steps you can take to rebuild your credit and take control of your finances.

CreditWise is here to help you keep an eye on your credit. You can also get a free copy of your credit report from each of the three major credit bureaus. Visit AnnualCreditReport.com to learn how.