Do You Know How Having a Debt in Collections Affects Your Credit Score?This one is easy—YES! Having a debt in collections will definitely affect your credit score. But that doesn’t mean you should give up. Arm yourself by understanding what debt collection is, why it affects your credit score, and what you can do to fight back.

Why Did Your Debt Get Sent to a Collector?

The people you owe money to—whether it is a medical office, utility, cell phone company, contractor, or anyone else—can only spend so much time trying to get you to pay a bill. Most service providers have a written policy about past-due accounts and will send your account to a collection agency after a certain time period—typically 180 days. Either the original creditor or the debt collector will then inform Equifax, Experian, and TransUnion that you have an account in collection. The credit reporting agency will mark that account “in collection” on your credit report—not something you want potential creditors to see!

What Will That Do to Your Credit Score?

That all depends on how much you owe. A collection on a debt of less than $100 shouldn’t affect your score at all, but anything over $100 could cause a big drop. In many cases, it doesn’t even matter how much it is if it’s over $100. Whether you owe $500 or $150,000, you may see a credit score drop of 100 points or more, depending on where you started. To make matters worse, a paid collection on your credit report is just as bad as an unpaid collection. Why? Well, creditors are looking at your report to determine how much of a risk they are taking by lending you money, so any indication that you don’t pay your bills on time will be a red flag for them.

So, What Can You Do?

The best thing to do is not allow a debt to go to collections. Easy, right? Not for everybody, I know. If the debt really is yours, you will want to communicate with the debt collector to see if you can negotiate a settlement that works for you. If you don’t work with the collection agency, they could sell your debt to another collector and now you will have two collection notices on your credit report for the same debt—not good!

There is always the possibility that the collection notice is on your credit report in error. In that case, you should take steps to correct your credit report as soon as possible. If you can’t get it corrected in a timely manner, call me!

Finally, if you have been harassed in any way by the collection agency, TO INCLUDE being contacted in an inconvenient way after you have sent them this letter you can sue them to make them stop and for monetary damages. You may even be able to get the debt removed from your credit report.

Work With Me to Take Action

If you need help or advice sending this letter or are already being harassed by a debt collector or are struggling to get your credit report corrected, call me to help you. Together, we can hold these unscrupulous providers accountable for breaking the law and get you the break you need to get back on track. Contact me online or call my office at 855.982.2400 and let's get things started.


Michael F. Cardoza, Esq.
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U.S. Marine & Consumer Financial Protection Attorney helping victims of ID theft and Credit Reporting errors.