Monday, September 8, 2014

Q&A: Collection Agency Keeps Updating Credit Report--Does This Hurt My Score Each Time?


I have a creditor that keeps reporting a major derogatory to my credit report every week. Sometimes twice a week. Will this bring my score down every time they report it? Its a $180.00 balance.



First, let me say that I'm surprised a collection agency is updating that frequently. I have some good news and some bad news. 

The good news is that you don't lose credit points every time the collection agency updates your credit report when updates occur that frequently. If the collection agency were updating your account every six months or even every year, your credit scores would probably drop somewhat each time, but very frequent updates, while detrimental to your credit scores, don't have the same immediately noticeable negative impact that more infrequent updates do. In the long run, however, the credit impact of both will likely be similar. Let me explain: 

One of the aspects of the mathematical formula that the Fair Isaac Corporation uses to calculate your credit score is the age of each account on your credit report. The exact formula is a trade secret, so there's really no way to estimate how much of an impact a collection agency's regular credit report updates will have. We do know, however, that the age of the accounts on your credit report accounts for roughly 10% of your credit score. 

If a collection agency merely adds its tradeline to your credit report and never bothers to update it (this is quite common) it has an immediate negative effect on your scores, but that effect lessens over time. Because the tradeline isn't updated, the scoring formula doesn't view it as being "fresh." Older entries that aren't updated affect your credit scores less and less as time goes by. 

When a collection agency regularly updates its tradeline, however, it ensures that the scoring formula continues to view the collection as a recent item. This, in turn, prevents your credit scores from gradually outpacing the collection account as it ages. An updated collection account carries the same negative weight the day its removed from your credit report as it did the day it was first inserted. 

Here's the good news. The fact that the collection agency keeps updating your credit report has no bearing whatsoever on the date the credit bureaus will remove the negative tradeline. The collection account should come off 7 years from the date the original debt fell 180-days delinquent (this is usually, but not always, the original creditor's charge-off date). If the debt is relatively recent, there's a good chance that these frequent credit report updates will slow down and eventually stop sometime in the future. 

Best of Luck,


  1. Hi Lee,

    I'm in CA and made the mistake of calling a collector regarding a debt on my credit report from 2010. I verbally agreed to pay and they sent me a fax to show my amount due. This was all before I knew about SOL. The bottom of the fax states " because of the age of your debt we cannot sue you, but will continue to report your debt to the agencies".

    Will they report a new activity on my credit report just because I called and agreed to pay? The reason I ask is because I have been preapproved for a loan and I don't want "new activity" to affect my score even more. I won't be paying it and plan to let it fall off after 7.5 years.

    Thanks so much!

  2. In California paying the debt does not automatically reset the statute of limitations, so you're safe from a lawsuit even if you submit a payment provided that you do not provide the collector with a written statement acknowledging that you owe the debt. A payment and a written acknowledgment of responsibility will reset the SOL.

    But the answer to your question is yes, paying might result in the collection agency updating your account with the credit bureaus. The good news is that you don't have to wait 7.5 years. If the debt went delinquent in 2010, you have roughly 3 years to wait before it falls off your credit report.