How Long Do​es A Collections Claim Stay On Your Credit Report?

Avoid getting your account charged off or in collections.

Your credit report documents your entire financial history. This includes unfavorable things like if you forgot or couldn’t pay a bill. If you have neglected to make consistent, on-time payments on a specific loan, your account may be charged off or put in collections. It is best to avoid this. However, if you have defaulted on a loan payment, your credit report and your credit score will be brought down. Read on to find out how long a collection stays on your credit report, and what you can do about it.

Avoid getting your account charged off or in collections.

What does it mean if your account is charged-off or in collections?

Whether you’ve lost your job or money is tight where you are unable to pay your bills, you may be delinquent in paying a debt. Once this happens for a period of time, a lender may recognize that you are not going to pay the loan. They mark your account as “charged off“, meaning it is an accounting loss. The lender can notify the credit bureaus and opt to sell your loan to a collection agency. Collection agencies are independent collection companies or lawyers and they may or may not notify you that your account has been put in this status. You now owe the collection agency directly and they will then do what they can to collect the money from you.

Collection agencies use letters and phone calls to contact you. They may investigate you further to find out alternate contact information and to see if you are able to repay the debt based on asset information. Collectors may report your unpaid debt to the credit bureaus in an attempt to get you to pay. They know this will do grave damage to your credit report and score.

Know that different lenders have different policies as to how long they will allow for non-payment before putting your account in collections. And then, the lenders and the collection agencies have different policies as to when they report the delinquency to the credit bureaus.

How long do charged off or collection accounts remain on your credit report?

Unfortunately, charged off or collection accounts remains on your credit report for up to seven years. This is a long time but remember that the positive historical data remains on your report even longer.

Your credit report will show your collection status from the date of the first missed payment. You may see the collection account held by the independent collection agency as well as the account with your original creditor listed on your credit report. Once resolved and your debt paid off, both should be deleted from the collection status on your report.

What does charged off or collections do to my overall credit?

Surely, your credit score will drop a good deal. How much your score decreases can depend on what your credit score was. The higher your original score, the more points you may lose. Additionally, the amount owed affects your credit score. If the amount of money you are in collections for is relatively small say a few hundred dollars, your score may only drop a little. Last, your credit score considers the type of debt in collection. If a medical debt, it may not have as severe an impact on your credit score.

Bottom line is that you want to avoid becoming delinquent, to begin with. If you lose your job or can anticipate problems paying off loans, contact your creditors immediately to arrange payment plans. If impossible to avoid missing a payment, then work to remedy the debt as fast as possible. Avoid being late on any additional debt. The collections status will impact your credit score as you can be denied future credit. As time passes and you establish consistent payments, your credit can be recovered.

False Charge Off or Collection Status

Errors can happen. Make corrections to your report if an account status is wrong. Also, if your charge off or collections status has passed the seven-year anniversary, you’ll want to get this corrected. You  may want to file a dispute with the credit bureaus to get things right.

Whatever you do, pay your bills on time.

Ultimately it is best to avoid the charge off or collection status altogether. But if you find yourself in a financial predicament, and you don’t pay your debt, you now know it will remain on your report for a long time. To help improve your credit and financial situation, make sure you make consistent payments going forward.