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Credit History & Credit Report

Credit History & Credit Report
Mark Cappel
UpdatedFeb 13, 2013
Key Takeaways:
  • Each owner of a collection account becomes part of the debt's history.
  • A bought and sold debt does not have more impact on your credit score.
  • Review all three of your credit reports to look for errors.

A debt shows up five times in my credit history, and I want to pay it off. Which collection agent do I pay? Is this an error?

Bad money management and being unemployed caused my credit cards to become delinquent. Since its been years since the accounts became delinquent, the credit cards collection accounts have been sold to collection agencies. The collection accounts show up on my credit report multiple times because the collection agents resell my accounts. I receive letters in the mail with settlement offers that are really good, but I do not know who to pay. What can I do so that I do not have 5 collection agencies for 1 account on my credit report?

Your credit reports contain credit history your lenders share with consumer credit reporting agencies (CRAs) about your debts. The three biggest US CRAs are Equifax, Experian, and TransUnion. Keep in mind that each CRA is independent of the others, and credit history appearing in your credit report at one CRA may be different from what appears at the other two.

Your credit reports are intended to be a history of your debts. That is why when an original creditor, such as a credit card issuer, sells a delinquent account to a collection agent, the debt appears twice on your credit report. This is confusing at first glance, because if an original creditor sells a collection account to Collection Agent A, who later sells the account to Collection Agent B, one debt appears on a credit report (or two credit reports, or all three credit reports) three times.

If you look closely at your credit reports, when an original creditor sells a collection account, the account status will change to something like, "closed" or "assigned." As the collection account is bought and sold by each collection agent, you will see the date each transaction takes place, and the status for the collection account at each collection agent along its journey.

Your wandering collection account may have a long credit history with ownership by a dozen collection agents, but the account makes one impression on your credit score. Credit scoring software, such as FICO or VantageScore, are supposed to recognize the chain of custody for the collection account, and see the account for what it is — one debt you owe. FICO and VantageScore do not penalize a consumer's credit score for a collection account that has been around the block a few times, so to speak, in comparison to an otherwise identical debt still owned by the original creditor. FICO and VantageScore give the same penalty for one-owner and multiple-owner collection accounts, all other things being equal.

Quick Tip

The Debt Coach will give you no-nonsense advice on your options for resolving your debt problem.

To contact the current owner of your collection account, look at one of your three credit reports and find the debt. Look for the current owner. The account status for the current owner will be something other than "closed" or "assigned." It should be the latest owner.

Collection agents are supposed to report the status of the accounts they own once each month, but some are less diligent about reporting the status of their accounts than they should.

Credit History and the 7-Year Rule

Under federal law, most derogatory information in your credit history must be removed from a consumer's credit report 7 years after the date of first delinquency. (Exceptions to this rule include bankruptcies, federal student loans, and judgments.) If you have a collection account that has passed through several sets of hands, the 7-year clock does not restart when a collection agent buys or sells the account. The 7-year clock starts when the debt become delinquent during the original creditor's ownership of the account. The date the original creditor sells a collection account, or when one collection agent sells the account to another is irrelevant to the 7-year rule.

Quick Tip

Get no-cost, no-gimmick copies of your credit reports from

Settling a Collection Account

According to information contained in the annual reports of US big banks, major credit card issuers sell credit card collection accounts to collection agents for about 8 cents on the dollar. A collection agent who buys a collection account from an original creditor has the right to collect the face value of the debt, plus interest if the consumer's state allows it to do so. Keep that 8-cent figure in mind when negotiating a settlement with a collection agent who purchased your collection account.

Start your negotiations at 10 or 15 cents on the dollar for a lump-sum settlement, and proceed upward from there. Or, consider hiring a debt resolution company if negotiating is not your strength.

Get any settlement agreement in writing, and keep records of your payments.

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




MMaxine, Feb, 2013
Do some student loans follow the 7-year rule, or if no, which ones don't?
BBill, Feb, 2013
See the article How Long Student Loans Appear on Credit Reports for a discussion of this issue.
BBill, Aug, 2010
Jayne, you are doing all of the right things to improve your credit and clean up any negative things in your credit history.You should also pull your credit reports and make sure that everything on there is accurate, including your address and personal information.Most importantly, continue to use credit wisely and don't let the amount that you owe go above about 25% of your credit limits and be sure to pay on time. You can ask for your lenders to increase your credit limit as you establish a positive payment track record, which may help your credit picture as well. Good luck Jayne.
JJayne, Aug, 2010
I had several collection accounts on my credit. I have since paid off all my debt and now only have a $300 dollar credit card which I never spend more than 25-30% on and always make the minium payment on it on time EVERY month, i also have a personal loan at a credit union which has now been paid on time for 4 months and is also not set to auto pay. I really want to get my credit score up what else can I do?
BBill, May, 2010
After 7½ years, the accounts may no longer appear on a consumer's credit report. Everything can remain on a credit report for up to 7 years, and a bankruptcy can remain for up to 10 years typically.
JJustin, May, 2010
Once 7.5 years has passed on a delinquent account what do those accounts appear as on your credit report? do they report something derogatory or do they just not show up at all?