Collection accounts, or debts, remain on your credit report for seven years, negatively impacting your credit score. If a debt is a mistake, or if the collection is valid but the amount is incorrect, take a proactive approach and dispute the error.
Here are some helpful considerations if you don’t recognize a collection account on your credit report.
What To Do if a Debt Isn’t Yours
If you don’t recognize a collection account associated with your name and credit report, you have the right to dispute it by sending a letter to the credit bureau and the business or creditor that reported the debt. You will first want to gather all the facts before you attempt to dispute a collection account.
Start by reviewing your updated credit reports from all three bureaus — TransUnion, Equifax and Experian — to see if the collection account is indeed yours. Look to see if the original creditor on your credit report may have sold your unpaid debt to a collection agency, which could be why you don’t recognize the company listed on the collection account. You can also contact the collection agency to confirm the business or creditor where the debt originated.
Once you’ve confirmed the collection account is not yours and that it’s an error on your credit report, take action to file a dispute as quickly as possible.
By law, TransUnion, Equifax and Experian have to respond to your dispute within 30 days, and it may take up to 45 days for your report to be corrected if your dispute is determined to be valid. If there was, in fact, an error, you can ask each bureau to send a notice of correction to anyone who obtained your credit report in the last six months to two years.
It may surprise you to know that one in five people have errors on their credit reports that can affect their credit scores — but the good news is that 20% of consumers who dispute mistakes see their scores increase.
Should You Pay Off Accounts in Collections?
If the collection account on your report belongs to you, you’re obligated to pay the actual debt. And in many states, wages can be garnished for unpaid debt. However, even if you pay off the account, a derogatory mark will remain on your credit report. The impact of the negative mark decreases over time — and some scoring models, such as VantageScore 3.0, don’t penalize your score for collections that are paid in full. But either way, if you can get a collection account removed from your report, so much the better!
You also have the option of sending a goodwill deletion letter to the creditor asking that the collection be removed from your report. A goodwill deletion letter essentially asks the creditor for forgiveness. Whether it works is up to the creditor.
Note: It’s worth your effort to contact your creditor and work out a payment plan for your past-due debt before it gets turned over to collections.
Do I Have To Pay a Debt That Is Not on My Credit Report?
Not all debt is reported to the credit agencies, and if it doesn’t appear on your credit report now, that doesn’t mean it won’t appear at some time in the future. Any unpaid debt, from credit card balances to medical bills, is fair game for collection — and your paycheck could potentially be garnished. Keep making regular payments on all the accounts you owe in order to maintain good credit.
Protect Your Credit Scores
Be sure to monitor your updated credit reports regularly, and take swift action to correct errors and dispute collection accounts you don’t recognize.
Collection agency professionals are trained to be persistent, and there’s no official law limiting the number of times they can contact you. If the debt is listed as yours, they will keep trying to collect.
