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Collection Account & Credit Score

Mark Cappel
UpdatedJul 22, 2010
Key Takeaways:
  • Changes to a credit report occur 60-90 days after the event.
  • Clear your credit history by disputing incorrect entries.
  • Build your credit by opening multiple tradelines.

I paid my collection accounts and my credit dropped. Why? What can I do about it?

I just paid off my last two collection accounts. I was signed up for a credit monitoring/fraud protection service, and just got in the mail my most recent credit information. It showed that my credit score literally TANKED (except TransUnion)! I went from Equifax 594 to 555, TransUnion 569 to 600, Experian 621 to 515. What do I do?

A credit record is an imperfect snapshot of a person's credit history that is 60-90 days out of date. The soonest that any change can be reflected in a credit score is 60-90 days.

How much a credit score changes is reflection of the consumer's activities in the account in question, plus all of the other accounts (called tradelines) the consumer has. A person with many strong tradelines will see their credit score recover faster after a setback than a person with one. A person with a foreclosure or repossession will see a deeper and longer harm to their score than a person with one delinquent tradeline.

I realize I have not answered your question directly. It is impossible to give a simple answer without knowing more about the consumer's complete credit history.

Clearing Your Credit Score

There are several steps you can take to help improve your credit rating, but building and maintaining a good credit score requires diligent effort and a long-term commitment to financially sound living. It's important to understand that everything remains on your credit report for up to 7 years, and a bankruptcy remains for up to 10 years. has a great article about understanding you credit score, for you to learn more.

Step 1: Obtain a copy of your credit report.

First, obtain a copy of your credit report from each of the three major credit bureaus: Experian, Equifax, and TransUnion. You can request no-cost, no-gimmick copies of your reports by visiting

Once you have received copies of your reports, you should carefully review them to make sure that all listings, especially the listings appearing in the "derogatory" category, belong to you and are being reported accurately. Credit reports are notoriously inaccurate, with consumers frequently finding listings of derogatory accounts that never belonged to them or that were paid off years ago.

Dispute any inaccurate listings with the appropriate credit bureau. See the Federal Trade Commission document FTC Facts for Consumers: How to Dispute Credit Report Errors for more information.

Clearing up inaccurate derogatory accounts may improve your credit score significantly, depending on the number of inaccurate listings you find on your reports.

Step 2: Pay off items.

Next, you should try to pay off any derogatory items that legitimately belong to you. While paying off these accounts will not make them fall of your report, it should improve your credit by reducing the amount of delinquent debt reporting to the bureaus and preventing the accounts from continuing to be reported as delinquent.

Once you have dealt with you derogatory accounts, you should begin paying down your other accounts, to reduce your debt to available credit ratio. You can safely carry some debt, but carrying too much debt month to month demonstrates that you are financially strapped, and should not be extended more credit. Ideally, your ratio of debt to available credit should be no more than 33%.

Step 3: Build your credit.

Finally, if you do not already have a long, positive credit history, you should begin to build one. You can start by opening a few small credit card accounts, making charges on them, and paying off most, if not all, of the balances each month. By doing this, you will show yourself to be a responsible user of credit, and your credit score should improve with each month you continue to show a positive payment history. If you find that you cannot obtain a traditional credit card because of credit problems, a secured credit card, in which you deposit cash in an account as collateral for the credit line, can help build a positive credit history.

How to calculate your credit score

Your credit rating is calculated based on several variables, including your payment history (do you have any late payments, charge-offs, etc.), the amount and type of debt that you owe, if you have maxed out any of your trade lines, and then several other secondary factors like the length of your credit history and how many recent inquiries have been made to look at your credit history. Since your past payment history accounts for approximately 35% of your FICO credit score, establishing a good payment history with your creditors is essential to building and maintaining a good credit rating.

To learn more about credit and strategies to improve your credit score, I encourage you to visit the Credit Solutions and Resources page.

I hope this information helps you Find. Learn & Save.




PPamela Bixler, Jan, 2015

I have two old credit card debts that are approaching their year expiration date. They will expire in March of 2017. Just in the past 2 years, they were resold to yet another collection agency. The collection agency is listed as a new trade line or collection account with an open date of 2013 and 2014. Will these new tradelines fall off my credit report when the original debt does in March of 2017? Or will these new tradelines stay on my credit for 7 years as well? How do I keep them from constantly reporting after the 7 years expirations? Or do the credit bureaus recognize its new trade lines that are connected to an old debt and automatically remove that after 7 years?

DDaniel Cohen, Jan, 2015

The accounts should fall off your credit report 7 years after the date of first delinquency. A collection agent reagaing a debt does not allow the debt to stay on longer. However, it is up to you to monitor your credit report and file disputes when inaccurate information appears. Make sure to dispute the presence of the debts, if they remain past the 2017 date. Your score will improve when they drop off and continue to be harmed if they remain on your report.