How Many Points Does a Collection Drop Your Credit Score?

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Your credit score is calculated through the things that are found on your credit report. So if you have negative marks, they can stay on your credit history for years. Building a good credit score may feel impossible if you have collection accounts such as medical debt on your credit report.

How many points does a collection drop your credit score? Is there anything that you can do about it to improve your credit scores? Our guide will talk about all these topics here.

What is a collection account?

If you are unable to make a payment to one of your creditors by the due date, your account is considered delinquent. There is often a late fee associated with a past due balance too.

When you fail to make your payment for a long period of time, it may go to a collection agency. This timeframe is typically around 180 days. Your creditor may decide that they need help with collecting payment.

Collection agencies are the third-party companies that help creditors collect these payments. Once a debt collector is brought in, your financial future could get into serious trouble.

Debt collectors will initially make contact with you to state that it intends to collect a debt. If you don’t feel that the collections account is a valid debt, you have 30 days to notify the agency. If the debt is considered valid, the collection agency can contact the credit bureaus to inform them of your collection status.

The credit bureaus will add this information as a negative remark on your credit report. Thus, your credit score will drop. Some collection accounts will stay on your credit report for up to seven years.

You must make arrangements with the collection agency as soon as possible once you’re notified of the collection account. This will give you the best chance to prevent them from reporting you to the credit bureaus.

How many points does a collection drop your credit score?

Once an account is sent to collections, your credit report will keep this information in your credit history for seven years. Even if the balance on the account is $1, it will stay on your credit report and have a negative impact.

The drop in your credit score will vary depending on where your score is before the negative remark. For example, if you have a high credit score, a collection account could drop your credit score by as much as 100 points.

Even if you pay the account, the impact on your credit score remains. That’s because the collection account was still reported to the credit bureaus. As time goes by, the impact on your credit scores will lighten, however.

What type of debts go to collections?

Almost any bill that you don’t pay can end up in debt collection with an agency. Unpaid debts are funds that you’ve borrowed and failed to repay. These debts are sold to collection agencies around six months after you missed a payment. The types of unpaid that go to collection agencies are:

  • Student loans
  • Auto loans
  • Credit card balances
  • Personal loans

Medical bills, utilities, bank fees, overdrafts, and fines and fees imposed by law enforcement, courts, or government agencies can also be handed over to collection agencies. When these types of unpaid bills are handed over to collection agencies will depend on the entity.

How long does it take for a debt to be sent to collections if left unpaid?

If you leave a bill unpaid for a long period of time, your creditor can charge off the debt. This action will close your account and sell the debt to a collection agency. This is generally done after 120 days have passed since the due date. At times it can take up to 180 days for a credit card to be charged off.

The balance on the charged-off account is changed to zero once the credit agency takes over the debt. A new collection account will then appear on your credit report.

It’s difficult to be surprised by a collection account. The creditor will attempt to contact you numerous times after the first missed payment.

Unpaid medical debt, utilities, or accounts from other service providers might come as more of a surprise. These types of bills don’t automatically appear on your credit reports. Once a collection agency takes over the collection account, they will get it added to your credit report.

When does a collection get reported to credit bureaus?

Unpaid debts like a student loan will take around four billing cycles or 120 days to get reported to a credit bureau. The creditor will charge off the debt and sell it to a collection agency.

It’s harder to tell when a utility bill or medical debt will get reported to a credit bureau. It will depend on the policy of the creditor on when they turn over unpaid accounts to a collection agency. After a debt is sent to the collection agency, they will report it to the credit bureaus.

How to find out if you need to pay collections

If you have an unpaid debt, your creditor will reach out to you. They may contact you via email, regular mail, or phone. Otherwise, you should check your credit reports regularly to ensure that you don’t have collection accounts that you don’t know about.

Many credit card companies offer your credit score for free as a service. Some also provide access to your credit report. If you don’t have a credit card or one that offers this, contact the three credit bureau agencies. You’re eligible for at least one free copy from each of the three credit bureaus each year (Experian, TransUnion, and Equifax).

Should you pay off collections and will it improve your credit?

Even if you pay off a collection account, the impact it has on your credit score won’t go away immediately. You’ll have to wait until the collection account is removed completely from your credit report. This takes around seven years in most cases. The older the collection account is, the less impact it will have on your score.

What happens when you don’t pay collection accounts

Not paying a collection account is not a good long-term strategy. Some of the potential consequences of not paying a collection account include your credit score decreasing, interest charges, and even lawsuits.

It’s in your best interest to pay a collection account. If you’re unable to repay the debt, you should contact the collection agency. In many cases, they’re willing to work with you to establish a payment plan.

As long as you don’t repay the debt, the collection agencies are likely to continue reaching out to you. They may call, mail, email, or fax you to get in contact. In addition, collection agencies are allowed to contact your friends or family members to get in contact with you.

Can collections that are paid off be removed from a credit report?

Paying off collection accounts normally doesn’t have an impact on your credit score. In some cases, it can actually lower your score. For example, let’s say your account was reported as unpaid in 2018. You paid off the collection account in 2019. Over that time, your credit score actually improved a bit.

But once you have paid off the debt, your collection will show up as “current” on your report. That may have a negative impact on your credit score. People should be aware of this before they pay off a collection account.

So if paying off a collection account will hurt your credit score, what should you do? The best approach is to get in touch with the collection agency and offer to pay the debt in return for having the collection removed from your credit report.

This strategy might not work, depending on the agency that you’re negotiating with. But it’s definitely worth trying.

Other ways to improve your credit score after paying a collection

If you have bad credit or want to improve your score after settling a collection, there are other things you might be able to do like:

  • Lowering your utilization rate – Try to reduce or pay off your credit card balance in full each month. Keep your credit utilization ratio under 30% of your total credit limit.
  • Don’t apply for new credit – Avoid taking out an installment loan such as a personal loan or applying for a credit card. A new credit account will lower your credit score in the short term.
  • Dispute inaccurate items on your credit report – If you have unfair or inaccurate items reported on your credit report, contact the credit bureau immediately. Removing these errors can help improve your credit score.
  • Pay bills on time – Having a positive payment history will improve your score over time. Sign up for automatic payments or payment due date alerts through your creditors to help keep you on pace. 
  • Credit repair – Sometimes you need help from professionals who know what to do to repair your credit.


Collections can happen to anyone, even if you’ve been responsible for managing your credit. Sometimes you feel like your credit dropped when nothing changed, and others it can go up when you didn’t expect it to. The impact of a collection account on your credit report can last up to seven years. But the good news is that over time, the effect is reduced. Attempt to work out a deal with the collection agency to repay the debt in return to get the remark removed. If they don’t agree, work on improving your credit through other ways like lowering your usage on your credit card accounts. With time, your credit score will increase, and you get back to a solid financial life. 

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