How Long Before My Collection Account Is Updated?

Dear CLA,

When you pay off a collection account, it could take a month or two before you see the change reflected on your credit report. The collection agency needs to update their records and then notify Experian that the account status should be updated to show paid in full on your credit report.

If the update is time-sensitive, you can request written documentation from the collection company stating that the account is paid in full and upload that documentation directly to Experian via the online Dispute Center.

How Long Does a Collection Account Stay on My Report?

A collection account can remain on your credit report for up to seven years from the original delinquency date, even once it has been paid. The original delinquency date is the date of the first missed payment on the original account that led up to the account being sold to collections, or the date the account first became delinquent and was never again brought current.

In some cases, both the original account and the collection account will appear on the credit report. The original account will appear as closed or transferred once it has been sold to collections, but the history of the account remains.

Both the original account and the collection account will be automatically removed from your credit history at the same time: seven years from the original delinquency date.

Does Paying Off a Collection Account Help Me?

Although paying off a collection account will not automatically remove it from your report, it is still beneficial because:

• A paid collection account is typically regarded more favorably than an outstanding one.
• When buying a home, most mortgage lenders will require that any past-due collections are paid off or settled in full before they will consider approving you for a loan.
• Many of the newer credit scoring models now exclude collection accounts from the score calculations once they have been paid in full. That means paying off a collection account could improve your credit scores right away.

How Else Can I Improve My Credit Scores?

Keep in mind that your payment history and your utilization rate are the two most important factors in credit scores, so making all your payments on time and keeping your credit card balances as low as possible are key to having great scores.

Even if you've had credit mishaps in the past, there are some steps you can take to start improving your credit scores right away:

• Bring your accounts current. If you have any accounts that are past due, the first step is to bring those accounts current as soon as possible and make sure that all payments are on time going forward.
• Pay down existing balances. The next step is to focus on your credit card balances. If you are carrying a balance on your credit cards month to month, paying down or paying off those balances can lower your credit utilization rate, which will likely improve your credit scores.
• Get your credit report. Order your free credit score from Experian and take a look at the risk factors that are included with the score. These risk factors tell you what specific changes you can make to your credit history to begin helping your scores increase.
• Sign up for Experian Boost^®ø. With this free service, you can start getting credit for your on-time utility, cellphone and streaming service payments and boost your credit scores right away.

Finally, review your credit reports periodically. You can order your free credit reports from each of the three credit reporting companies (Experian, TransUnion and Equifax) at AnnualCreditReport.com. Checking your credit reports often can help you stay on top of what your lenders are reporting, and it can also help you catch any potential fraud and identity theft sooner.

Thanks for asking.

Jennifer White, Consumer Education Specialist