When Do Collection Agencies Report To Credit Bureaus?

Last Updated: Nov 15, 2022

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Once an account has been left unpaid long enough lenders may consider the account in default (more than 30 days), the lender may turn over the debt to a collections agency. Virtually any type of unpaid debt can be sent to collections and will remain on consumer credit reports for 7 years.

When Do Debt Collectors Report Debt To Credit Reporting Companies?

The Fair Debt Collection Practices Act (FDCPA) is a federal law requiring debt collectors adhere to certain procedures, before reporting consumer debt to credit bureaus for collections. Debt collectors must do the following before attempting to report your debt:

  • Communicate with you by telephone about the debt,
  • Communicate with you in person about the debt,
  • Communicate the outstanding debt by mail, and
  • Communicate the outstanding by electronic communication.

Debt collectors must satisfy the debtor contact requirements of the FDCPA before debts can be reported to credit bureaus. Besides the FDCPA procedures, collection agencies aren’t subject to a waiting period before reporting debtors to the credit bureaus.

What Impact Does A Collections Account Have On Your Credit?

Collections will be reported for 7 year once listed on your credit report. Having a collection on your report will damage your credit score and reduce the likelihood of you being approved for:

  • Auto loans.
  • Mortgage loans.
  • Personal loans.
  • Credit cards.
  • Lease agreement.

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When Is Disputing Collections On Your Credit Report A Good Idea?

The Fair Credit Reporting Act (FCRA) permits consumers to dispute any collection account on their credit report. Disputing the collections won’t damage your credit score either. The following instances would have a higher likelihood of being disputed than legitimate debts:

  • The debt was mistakenly sent to collections,
  • The debt isn’t owned by you,
  • Account was correctly removed and then mistakenly reinserted later,
  • Debt collectors report old debts as new by altering the accounts opening date,
  • Charges were incurred as a result of identity theft, or
  • The collection is a medical debt that should have been covered by insurance.

Bottom Line

Review your credit report regularly to ensure you dispute any incorrect items like collections as soon as possible. You can consult credit repair specialists Credit Sage to solve all your credit disputes on your behalf. Allow a team of credit repair specialists to get your credit score on track to its optimal potential now.

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