A Paid Collection is still a Collection

Credit increase credit debt team jeffesonDid you know…

Just because you pay off a collection on your credit report  it does not erase the derogatory marks on your credit.


Collections Old Debt

Final Notice You have 7 days to avoid Legal Action

A collection is an account that has been severely past due and the creditor gave up on receiving payment and turned the debt over to a Collection Agency to try to collect the money owed usually adding additional fees to the balance.  


It is very likely that this new collection will report to your credit report where it could remain for up to seven years but also it may show a derogatory account with the original creditor that turned it over to the collection agency.

Many people believe once a collection is paid that it will be removed from your credit report. Some collection agencies will even go as far as tell you that they will remove the collection from your credit but usually, (unfortunately) this is a ploy to get your payment. It is highly recommended that before you pay a collection you get this statement and agreement to remove the collection from all three bureaus in writing!

Once you pay a collection two things happen. Sure the collection should now show as “Paid” however the “last date of activity” on that collection will be new again as you just woke it up by paying it off, which affects your credit harder than an old collection.  So be careful, anytime you take action on an old account either by making a payment or acknowledging the debt is yours as this will make the date of last activity new and recent all over again.

It is of course BEST to not allow any creditor to send your accounts to collections EVER!

Make your payments on TIME!

Another thing to remember that when collection agency contacts you they may actually have the wrong person. This happens often so ask for their proof the collection is yours by sending it in writing. Be careful not to say anything that will make the collector believe you are in fact responsible for the debt. Remember the call is recorded. It is best you do not speak to collection agencies on the phone and by law they are required to send you detailed mail regarding your debt they say you owe.  Mistakes happen and if a creditor cannot prove the debt is yours they should remove it from your credit report.  You can dispute such items with the credit reporting agencies or a credit repair company that knows the laws and can work to clean up your credit for you according to the Fair Debt Collection Practices Act.

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Collection calls? Don’t admit to anything but rather ask for everything in writing.

To sum it up:

1.       It is BEST to not allow anything to go to collections. Make your payments on time!

2.       If something has went to collections make sure you ask for proof in writing that it belongs to you, especially if it is something you don’t remember.  

3.       Never admit an old debt is yours. It will make the Statue of Limitations begin again.

4.       It is best not to speak to a collector over the phone.  You can ask them to NOT contact you via phone any longer. This is called Cease and Desist.

5.       Dispute inaccuracies or obtain a credit repair company that knows the laws to do it for you.

One last note. If you are planning to purchase a home in the near future be very careful contacting old creditors and collectors as it will make the old new again. This could easily and most likely cause your score to decrease momentarily.  Also consider speaking with a mortgage professional first to allow for some guidance with your credit report so you will have a better understanding of what needs to be handled on your credit report before moving forward with a home loan. Finally, most lenders will not offer you a mortgage if you have the wording, “disputed” all over your credit report so be aware in advance. Good credit repair companies will remove the dispute wording when they are finished working on your credit.




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