No one wants debt to end up in collections, but if you have medical or other debt that has gone to collections, it won’t affect your credit report forever. Usually, collections stay on your credit report for seven years. The type of debt makes a difference. Medical debt in collections is weighed less heavily than other debt in collections. How long do collections stay on your credit report? It varies by credit scoring system. Here’s what you need to know.
How collections on a credit report work
If an account is significantly past due, the creditor can turn it over to a collection agency or an internal collection department. In either case, once the account is passed on to a collection agency, it will be reported as a separate account on your credit report. Credit cards and personal loans are the most common types of accounts that can go to collections, along with medical debt.
If the debt is valid and correct, collections stay on a credit report for seven years after the missed payment. If the debt is not correct or has already been paid in full, you can dispute it and request that it be removed from your credit report.
Factors that affect how long collections stay on your credit report
How long collections can stay on your credit report depends on various factors. Generally, collections stay on credit reports for seven years from the delinquency date. Here are the factors to consider when understanding your credit report.
The date of delinquency
The date of delinquency is the date an account is no longer current or the date of the first missed payment.
The date of the first missed payment
The date of the first missed payment is considered the date of delinquency if you don’t make subsequent payments. If you make payments after your first missed payment but miss another payment, those collections will stay on the credit report both times the account was delinquent. Each will drop off your credit report seven years after the missed payment.
The type of debt
The type of debt matters. Medical debt may be treated differently. Since July 1, medical collection debt that’s been paid off won’t appear on your credit reports. Under some credit scoring systems, even unpaid medical debt doesn’t have the same impact on your credit score as other debt.
For example, VantageScore® 3.0 and 4.0 models don’t consider medical collections for credit score calculations as of January 2023. Not having medical collections staying on credit reports is great news for consumers struggling with medical debt.
How different credit score models deal with collections
Lenders use four different credit scoring models to calculate your credit score. Two are versions of VantageScore, and two are versions of FICO Score. In all cases, paid medical debt will be removed from a credit report.
Unpaid medical debt won’t show up on credit reports until one year after it’s due, giving you more time to pay it off without hurting your credit score. And all three credit bureaus will no longer include medical bill collection accounts with balances under $500 on credit reports.
Here’s how each credit scoring model treats collections and debt and what collections will stay on your credit report:
VantageScore 3.0 doesn’t weigh paid collection accounts. All medical collection data is now removed from the calculation of a consumer’s credit score.
In the VantageScore 4.0 model, paid collection accounts do not affect credit scores. Medical collection accounts that are less than 6 months old also don’t affect your credit score. Unpaid medical debt in collection is weighed less than other types of collection accounts in the credit score.
FICO Score 8
FICO Score 8 ignores collection accounts with original balances of less than $100. But it weighs medical collection accounts, even paid medical collection accounts, like any other collection account. Collections are considered a part of payment history, which account for 35% of your credit score. With FICO Score of 8, collections will stay on the credit report.
FICO Score 9
The FICO Score 9 improves on the FICO Score 8 in how medical debt is treated. FICO Score 9 doesn’t include paid collection accounts. It also weighs unpaid medical collections less heavily than other types of collection accounts.
How to dispute a collection with a credit reporting agency
If you find a collection on a credit report that isn’t correct or has already been paid off, you have the right to dispute it. Here are options you can consider.
If an error has been made
If there is an error on your credit report, you have the right to dispute it to have the incorrect information removed. For example, if the debt in collections appears on the credit report that wasn’t your debt, you can request to have it removed. The Consumer Financial Protection Bureau has a template letter and instructions for each credit bureau to make it easier.
If you’ve paid off the debt in full
Many credit bureaus may be willing to drop collections debt from your report if it’s been paid in full. Three of the course credit scoring models (all but FICO Score 8) drop paid collections debt from your credit score.
If you negotiate
If it’s been some time and you’ve had a strong payment history, the credit bureaus may be willing to drop collections on your credit report. It can’t hurt to ask and negotiate based on solid payment history and debt that’s been paid in full or nearly paid in full.
Summary of collections that stay on a credit report
As of 2023, medical debt will be significantly less concerning for your credit report. As the FICO 8 score is phased out by lenders, paid medical debt will no longer be considered. And with all credit bureaus, medical debt of less than $500 won’t show up on your credit report. With these additional advantages, consumers have a better possibility of maintaining a high credit score even when faced with medical debt.
What happens if you don’t pay off collections?
If you don’t pay off collections, a debt collector or collection agency can sue you for the amount of the debt. They may be able to get a court order to garnish your wages to enforce a judgment. Never ignore unpaid debt.
Can credit repair companies remove collections?
Credit repair companies can only remove false information from your credit report. Incorrect information can be removed at any time, while correct collections information cannot unless it’s paid in full. Collections stay on your credit report unless it’s paid-off medical debt.
Do all collections fall off after seven years?
Almost all collections fall off your credit report after seven years, except for Chapter 7 bankruptcies, which take 10 years to fall off. Unpaid student debt or unpaid tax debt collections can stay on your credit report indefinitely, or seven years from the last date paid.