How Many Points Does a Collection Drop Your Credit Score?

If you’re like most Americans, you always want to keep your credit score as high as possible. We often get asked the question: how many points does a collection drop my credit score? So, we will use this post to answer this question in much detail.

How Many Points Does a Collection Drop Your Credit Score?

A collections account can drop your credit score by more than 100 points if your credit score is within the 700s range. However, if your score is below 700, the impact it will have on your credit score is likely going to be less than 100 points. The more recent collections account is recorded on your credit report, the bigger the impact it will have. As the collections account ages, the impact it has on your credit score will begin to lessen. The first two years of having the collections account on your credit report will result in the biggest credit score drop. That said, collection accounts remain on your credit score for 7 years from the date of the delinquency. The dollar amount of the collections account that’s placed on your credit report does not matter when assessing the impact it will have on your credit score, so whether the collections agency is attempting to collect $50 or $5000, your credit score will take drop just as much. So, to avoid having a collections account show up on your credit report, make sure that you always pay your bills to avoid having them going to collections. Also, explore the options of having the collections account removed from your credit report.

Can You Have a Collections Account Removed from Your Credit Report?

If an account that’s not yours is report to the credit reporting bureaus, you can have it removed by disputing the account through a credit reporting bureau, such as Experian, Transunion, or Equifax by filing a dispute.

Also, if a collections account is reported past seven years, you can have it removed by disputing it with the credit reporting bureaus or by contacting the collections agency and asking them to remove the account from your credit report. Oftentimes having incorrect items removed from your credit report is a difficult task even if you have proof. The best thing you can do to have inaccurate items removed is to contact a credit repair agency to assist you with the item’s removal.­

­If the collections account is yours and you’ve paid off the account, you can ask the collections agency to remove the collection account from your credit report. They are not required to remove the account, buy you can ask them to remove it as a goodwill removal. If the collections agency removes a collections account from your credit report, you could see your credit score go up by over 100 points depending on how good your credit score was prior to the collections account. That said, when people ask collection agencies to remove the collections account from their credit report, collection agencies often refuse to remove the collection from showing up on your credit report. So, keep this in mind if you’re thinking about negotiating the removal of a collections account from your credit report.

Is it Better to Pay a Collections Account or Leave it Unpaid?

If a collections account has caused a drop in your credit score, paying the collections account will not improve your credit score. That said, paying a collections account is a good idea because lenders and creditors who look at your credit report would rather see a collections account paid. Also, paying a collections account keeps the account from being sold to another collections agency that can place an additional collections account on your credit report. So, it’s best to settle a collections account to avoid future troubles.

Does the Dollar Amount of a Collections Account Impact the Amount of Points Your Credit Score Drops?

No, the dollar amount of a collections account does not affect the amount of points your credit score will drop. For example, a collections account with a $200 balance and a collections account with a balance of $200,000 will impact your credit score the same way. Some newer credit scoring models ignore collection accounts that are under $100, but collections accounts with dollar values over $100 all count the same in terms of the impact that they will have on your credit score. So, if you were wondering whether a $1000 or $100 will cause a bigger drop in your credit score, the answer is that both will likely cause the same drop in your credit score.

Can Paying a Collections Account Cause a Drop in Your Credit Score?

Rest assured that paying a collections account will not cause a drop in your credit score. A paid and unpaid collections accounts are given the same weigh by the credit reporting agencies when calculating a person’s credit score. What matters the most for a collections account is the date the collections account is reported to the three main credit reporting agencies, such as Experian, Transunion, and Equifax. The more time that passes from the date of the collections account, the less drop it will cause to your credit score. So, put the myth that paying a collections account causes your credit score to drop to rest.

Does Settling a Collections Account Drop Your Credit Score?

Again, no. Settling a collections account will not cause a drop in your credit score. This is so because as we previously mentioned, the status of a collections account as paid or unpaid and the dollar amount of the collections account do not have an impact on your credit score. So, settling a collections account will not drop your credit score. The advantage of settling a collection is that it prevents the collection agency from selling the debt and causing further damage to your credit.

How Many Points Do Multiple Collections Drop Your Credit Score?

Your credit score will drop the most after the first collection account is reported to the credit reporting bureaus. A second collections account may cause a small drop to your credit score, but nothing comparable to the first collection account. For example, if you were lucky enough to have the first collections account removed from your credit report, you may barely see any improvement to your credit score, especially if the second collections account is newer. This is so because the newer the collection account, the more of an impact it will have on your credit score.

Frequently Asked Questions

1) Will my credit score increase if I have a collection deleted?

If you only have one collections account on your credit report, having that account deleted will cause your credit score to significantly increase, especially if you had a credit score within the 700s prior to having the collections account added to your report.

2) How many points do you lose for a collection?

If you had a credit score that’s within the 700s range, a collections account can decrease your credit score by 70 to 100+ points. However, if your credit score was below 700, you might see a lesser drop in your credit score.

3) Can you have a good credit score with collections?

Yes, you can have a good credit score even with a collections account. However, a collections account will drag your credit score down.

4) Will deleting collections improve my credit score?

Yes, if you only have one collections account, getting the account deleted will significantly increase your credit score.

5) Is it better to pay off collections or wait?

It is always better to pay off a collections account to avoid having another collections agency from purchasing the debt and adding a second collections account to your credit report.

6) How do I get collections removed?

You can get a collections account removed by contacting the collections agency and asking them to remove the account either out of goodwill or because there is some error on their part. That said, it is difficult to convince a collections agency to remove a collections account from your credit report.

7) Can a medical collections account drop your credit score?

Yes, medical collections are some of the most prevalent types of collections accounts. Medical collections can drop your credit score anywhere from 50 to 100+ points. So, if you have a medical collections account, try to negotiate with the collections agency to remove the account from your report if you pay the bill.

How Many Points Can a Collections Account Drop Your Credit Score?

At this point, you should know that a collections account can drop your credit score by over 100 points, especially if you had a credit score that was above 700. So, if you have an unpaid medical bill that was sent to collections or any other type of bill that was sent to collections, you should expect a significant drop in your credit score. That said, in some circumstances, you might be able to have the collections account removed by disputing the account with the collections agency itself or by disputing it through the credit reporting agency that’s reporting the collections account. If you have any general questions or comments, please feel free to leave them in the comments section below.