A debt in collections appears on your credit reports for seven years from the month of the first missed payment that triggered the collection effort. A collection account can damage your credit scores, but its impact will lessen over time.
A debt in collections remains on your credit reports for seven years from the month of the first missed payment that led to the collection process. A collection account can damage your credit scores as long as it appears on your reports, but its negative effect on your scores lessens over time.
Having a collection account on your credit report can be frustrating. It likely indicates that you were unable to pay a debt owed, which then got turned over to a collection agency. This can negatively impact your credit scores and make it harder to get approved for loans or lines of credit.
If you are able to pay off the collection account, a common question is: will it then get removed from your credit reports? Unfortunately, paying a collection does not automatically remove it from your credit file. However, there are some steps you can take to get it deleted faster. Let’s take a closer look at how paying collections affects your credit reports and scores.
How Paying Collections Impacts Your Credit Reports
When you fail to pay a debt owed to a creditor like a credit card company or doctor’s office, they may charge-off the account after 6 months of no payment This means they write the debt off as a loss, then sell it to a collection agency. The original creditor no longer expects payment from you
The collection agency then contacts you to collect payment on the debt. If they are successful in getting you to pay, they will report the collection account as “paid” to the credit bureaus. The major consumer credit bureaus include Equifax, Experian, and TransUnion.
Unfortunately, paid or unpaid collections remain on your credit reports for the same amount of time – generally 7 years from the date the original account first became delinquent So even once paid, the collection is not immediately deleted
Getting Collections Removed Early
While 7 years is the standard reporting period, there are some steps you can take to potentially get a paid collection deleted early:
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Negotiate Removal with the Collection Agency: When paying off a collection account, try negotiating with the collection agency to have it removed from your credit reports as a condition of payment. Get their agreement to delete in writing first before paying if possible.
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Dispute the Collection: If a collection agency won’t agree to remove a paid collection, you can dispute it with the credit bureaus if you believe it is inaccurate or shouldn’t be on your file. Provide evidence it was paid and request removal.
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Ask for Goodwill Removal: You can write goodwill letters to the collection agency asking for removal as a “goodwill gesture” given you have now paid. Highlight any extenuating circumstances.
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Wait for Automatic Removal: Paid medical collections under $500 will get automatically removed from credit reports after 1 year under NFCC reporting standards.
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Improve Overall Credit: Having strong positive credit history can also help offset the negative impact of a collection account. The collection will matter less if you have established accounts in good standing.
How Paying Collections Affects Your Credit Scores
In addition to getting a collection removed from your credit reports, a common question is whether paying it will help improve your credit scores. The impact varies depending on the credit scoring model used:
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FICO 8: This commonly used model still penalizes paid collections, though less than unpaid ones. Paying can help increase FICO 8 scores.
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FICO 9 and VantageScore 3.0: These newer models ignore all paid collection accounts, so paying will help improve these credit scores.
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VantageScore 4.0: This model completely disregards paid medical collections up to $1,000, boosting scores if you pay those account types.
So while paying a collection doesn’t make it disappear from your credit reports right away, it can still help minimize the damage and gradually improve your scores over time. Just don’t expect an overnight bounce by paying collections alone.
Steps to Take After Paying Collections
If you’ve recently paid a collection account, here are some important next steps to take:
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Review your credit reports and ensure the collection now shows as paid, rather than unpaid. Dispute any errors.
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Consider asking the collection agency for removal as a goodwill gesture since you paid. Get agreements in writing.
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Hold off on applying for new credit if possible. New credit inquiries could offset score gains from the paid collection.
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Continue paying all other accounts on time going forward. This builds positive payment history.
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Ask creditors for credit limit increases on existing accounts in good standing. This can improve credit utilization ratios.
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Sign up for free credit monitoring to stay on top of any changes or new information being reported.
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Consider credit repair options if you paid your collection but it’s still heavily weighing on your credit profile.
Long-Term Impacts of Collection Accounts
Even after a collection drops off your credit reports, it can have some lasting impacts. For example, most negative information remains in your credit files for 10 years. So while the collection itself may not be visible after 7 years, it could still influence risk models and approval decisions for some lenders in years 8-10.
The damage to your credit scores can also linger even once the collection account is paid and removed. It takes time to rebuild credit, so paying a collection is just one step in the process. Continually demonstrating responsible credit management is key to offsetting past mistakes.
Finally, collectors have a certain number of years to legally pursue consumers for debts owed, known as the statute of limitations. This varies by state but can be as long as 6-10 years. Paying a collection restarts the clock, exposing you to potential legal action on old debts you thought were settled.
So weigh your options carefully when deciding whether to pay collections or let them naturally fall off your reports. While paying can be beneficial, it doesn’t necessarily make the negative mark disappear. Be sure to take proactive steps to continue strengthening your credit over time.
The Bottom Line
Having a paid collection on your credit reports is better than an unpaid one, but it isn’t a silver bullet to instantly remove the account or restore your credit. Payment will get reported to the credit bureaus, and may help improve credit scores to some degree. But you’ll likely need to take additional steps to get the collection deleted early.
Keep focusing on responsible money management – paying bills on time, keeping credit utilization low, and avoiding new debts. This will help strengthen your credit profile while you wait for the 7 years to pass. Don’t get discouraged by collections – focus on the financial behaviors within your control today.
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How Collections Impact Your Credit
Late payments and collection accounts could hurt your credit scores as long as they appear on your credit report. Their exact impact can depend on what else is in your credit report, the nature and amount of a given collection account, and whether or not you pay the collector the amount they seek.
Heres an overview of how collections impact commonly used VantageScore® credit scores and FICO® ScoresÎ.
| VantageScore 3.0 and 4.0 | FICO® Score 8, 9 and 10 |
|---|---|
| Ignores all paid collections | Ignores all paid collections |
| Ignores unpaid collections under $250 | Ignores unpaid collections under $100 |
| Ignores any medical debt included in your credit reports | Ignores medical collections that are under $500 and that are paid or less than one year old |
Heres more detail on how each type of collection impacts your credit scores:
- Paid collections: Under some circumstances, paying a debt collector what you owe them can eliminate a collections negative impact on your credit. Recent versions of VantageScore and FICO® Score credit scoring models ignore paid collection accounts, but many lenders may still be using older versions of those systems that dont ignore paid collections.
- Small collections: The latest versions of the FICO® ScoreâFICO® Scores 8, 9 and 10âignore collections for debts of less than $100, whether theyre paid or unpaid, while the latest versions of the VantageScore credit scoreâVantageScore 3.0 and VantageScore 4.0âignore collections for less than $250, whether theyre paid or unpaid.
- Medical collections under $500: If paid or less than one year old, medical collections for less than $500 are excluded from your credit reports and do not affect your credit scores. A rule change by the U.S. Consumer Financial Protection Bureau (CFPB) would have removed all medical bills from credit reports in March 2025, but implementation has been delayed. Versions 3.0 and 4.0 of the VantageScore credit scoring system ignore any medical debt included in your credit reports.
Tip: “Medical collections” refers to unpaid bills sent to collections by a medical facility or health care provider. If you pay a medical bill with a credit card and later default on the credit card account, related collections will not be excluded from your credit reports.
- All other collections: Collections that dont fall into the exception categories above will tend to hurt your credit scores while they remain on your credit reports. Their impact on your scores will diminish over time.
What Happens When an Account Goes Into Collections?
A creditor typically sends an account to collections only after youve missed several consecutive payments, and only after multiple attempts to reach you to arrange payment. If those efforts fail and they turn the debt over to a collection agency, heres what happens:
- The collector issues a debt validation letter. When the debt collector takes over the debt, they will reach out to you by phone, text, email or postal mail to attempt to collect the debt. Within five days of that initial contact, they must send a debt validation letter by postal mail or email. The letter spells out the source of the debt, the amount you owe and contact information for the collection agent. If you think any information in the letter is inaccurate, you have 30 days from receipt of the letter to request verification in writing.
- The collection account may appear in your credit reports. The debt collector may report the collection account to the credit bureaus. If the collection is related to one of your existing debt accounts, that account will be marked closed or transferred. The new collection account will appear as a separate account on your credit report.
- Efforts to get payment will continueâor escalate. By law, a collection agent may attempt to gain payment by phone, email, text message or social media but they cannot harass you. You have the right to ask collectors to stop contacting you.
- The collector might sue. A collector may file a lawsuit against you and, if successful, may be able to garnish your wages or bank account.
Paying Collections – Dave Ramsey Rant
FAQ
Do collections get removed once paid?
Do collections fall off after paid?
Even after you pay a collection account, it stays on your credit report for seven years. However, you can dispute collection accounts that are inaccurate.
Is it pointless to pay off collections?
Paying your collections will help you avoid potential legal action and additional interest and fees.
How much will my credit score go up after paying off collections?