How many points does a credit score go up when a collection is removed? We know that even small oversights can cause huge damage to your report. So, it’s understandable that you’d be concerned.
And, without trying to be too ominous, you should be concerned.
High credit scores provide access to bank loans, higher mortgages, credit cards, and better interest rate. Some employer even run credit checks to vet potential employees.
As you can imagine, it’s important to know your credit score. In a survey from LendEDU, 25% of millennials don’t even know what a credit score is — 5% of them even believe it’s you’re waiting list spot for a credit card.
So, it’s safe to say that we’re getting into a bit of technical territory as we jump into collections. Let’s take a minute to review the basics.
What is a Collection Account?
When you don’t pay your debts, the company sends it to a collection agency. This can apply to credit cards, but also with medical bills or department store loans. The original company chooses to write off the debt as a loss, then sell it to the collection agency.
Lenders sometimes have unique policies, but as a general rule, accounts enter collections after 180-days of non-payment. At this point, the agency who purchased your debt from the lender will report the “collection” status of your account to the credit bureau.
How Does a Collection Account Affect My Credit?
Once an account enters collections, it will harm your credit score AND credit history. If at all possible, avoid letting an account ever enter this status because of the harsh consequences.
First, the instance stays on your credit report for 7 years from your first delinquency. That means creditors will see you as risky, and it will be difficult to increase your credit score during this time. It’s also going to significantly drop your score. If you have a score of 700, for example, expect a drop of around 100 points.
Should I Pay Off My Collection Debt?
If possible, negotiate a way to get the collection DELETED from your report. Sometimes agencies will do this if you agree to pay back the debt. Be careful when going this route, and seek out a bit of professional advice to avoid making matters worse.
Here are the basic steps for paying off a collection debt…
- Send a written request for settling the debt in exchange for deleting it from the report.
- Wait for a written response from the collector before taking any action.
You’re going to wait a while between step one and two, which will give you plenty of time to dive into the gritty details of what next. Know that the more of your debt you’re willing to pay, the greater chance you have of them removing it from your report.
How Many Points Does a Credit Score Go Up When a Collection is Removed?
Now that you have a solid understanding of collection accounts, the answer to how many points does credit score go up when a collection is removed becomes quite simple. After all, if the collection knocked your 710 score down by 100 points, you can expect to see many of those points return it’s been removed from your report.
It’s nearly impossible to give you a specific number because every report is unique. Instead, let’s move from this blog to an email or phone call and discuss your situation more…
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If you’re struggling with debt and facing the credit consequences, consider getting professional help. Our team can guide you through the process of cleaning up your credit.