Collection accounts considerably lower your credit score and make you a greater risk for lenders – resulting in lenders charging your higher interest rates for lines of credit and loans. When the credit bureaus delete a collection account from your credit report, you credit score improves and lenders no longer take your previously unpaid debt into consideration. In certain situations, collection agencies can reinsert previously deleted information into your credit report.
How It Works
When you dispute a collection account on your credit report, the credit bureaus contact the collection agency that originally provided the information and ask it to verify its report. If the collection agency cannot verify the report or does not do so within 30 days, the credit bureau deletes the disputed entry.
Should the collection agency respond to the credit bureau after the bureau deletes its report with information backing up the original listing, the credit bureau will reinsert the original listing. Thus, a collection agency can put a previously deleted collection account back on your credit report.
The Fair Credit Reporting Act (FCRA) requires credit bureaus to keep consumers updated on the status of their disputes. If a dispute is upheld and subsequently overturned, the credit bureau must notify you that the derogatory information was reinserted. Each credit bureau has five business days to send you notice of the action, the collection agency’s contact information and a reminder of your right to place a 100-word consumer statement on your credit file explaining the derogatory entry.
Seven years and 180 days after you default on a debt, the credit bureaus remove the debt record from your credit history. This includes the original creditor’s report and any subsequent reports made by collection agencies. After the 7.5-year reporting period expires, a collection agency cannot legally reinsert information on your credit report connected to that particular debt.
The Fair Debt Collection Practices Act requires debt collection companies to provide consumers with written proof of a debt should they request it. This process is known as “debt validation.” After an individual requests a validation, the collection agency may not conduct any further collection activity until it has sent the requested proof to the consumer.
Although ongoing credit reporting is an exception to the FDCPA’s rule barring collection activity during the validation period, verifying the debt’s accuracy to the credit bureaus without first validating it to the consumer violates the law. You have the right to sue a collection agency should it violate either the FCRA or FDCPA.
- Federal Trade Commission: The Fair Credit Reporting Act (Section 605,611/p.22, 46-52)
- Federal Trade Commission: The Fair Debt Collection Practices Act (Section 809/p.11-12)
- Equifax. "What is a Charge-Off?" Accessed Oct. 31, 2020.
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- Federal Trade Commission. "Fair Credit Reporting Act," Page 1. Accessed Oct. 31, 2020.
- Federal Trade Commission. "Fair Credit Reporting Act," Pages 50-52. Accessed Oct. 31, 2020.
- Consumer Financial Protection Bureau. "Key Dimensions and Processes in the U.S. Credit Reporting System: A Review of How the Nation’s Largest Credit Bureaus Manage Consumer Data," Page 4. Accessed Oct. 31, 2020.
- FTC. "Consumer Reports: What Information Furnishers Need to Know." Accessed Jan. 24, 2020.
- Federal Trade Commission. "Fair Credit Reporting Act," Pages 50-51. Accessed Oct. 31, 2020.
- Federal Trade Commission. "Debt Collection FAQs." Accessed Oct. 31, 2020.
- Federal Trade Commission. "If I Dispute a Debt That Is Being Collected, Can a Debt Collector Still Try to Collect the Debt From Me?" Accessed Oct. 31, 2020.
- Federal Trade Commission. "Fair Credit Reporting Act," Page 22. Accessed Oct. 31, 2020.
Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.