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

Lee,

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.

--Anonymous 


Anonymous,

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,

Lee

Can My Credit Report Have More Than One Collection for the Same Debt?

Which collector should you pay?

Here's a horror story for you: You let a debt fall delinquent and the creditor sells it to a collection agency. Two years later you pull your credit report and discover not one, not two, but three collection accounts on your credit report for the same debt. Needless to say, your credit scores are in the toilet. This may sound farfetched, but multiple collections are a relatively common result of sheer carelessness.

Just as original creditors eventually sell unpaid debt to debt collectors, collection agencies also sell "uncollectable" debts to other debt collectors. The problem debtors often run into is this: debt collectors, like original creditors, often report their company's accounts to the credit bureaus. This results in a collection tradeline appearing on your credit report.

When the collection agency sells the debt, the new collection agency may also report the debt to the credit bureaus. If the previous debt collector doesn't bother to delete its tradeline from your credit report when it sells the account, your credit report will eventually contain several different collections for the same debt.

Multiple Credit Report Entries for the Same Debt Are Against the Law

It's perfectly normal to have two entries on your credit report for the same debt if those entries are the original creditor's account and the resulting collection account. Any further entries for the same debt are prohibited--even if each tradeline contains different account numbers (which they almost inevitably will). This isn't in the interest of protecting you, but rather in the interest of protecting future creditors.

Your credit scores are based on the most accurate portrayal possible of your past financial history. Multiple collections for the same account deal a devastating blow to your credit scores--making you appear to be a much higher lending risk than you actually are. By ensuring that multiple collection accounts can't appear on your credit report for the same debt, federal regulations protect lenders from making judgment errors that could ultimately affect their profit margins.

Prohibiting multiple collection accounts also protects the collection agency's interests. If you see a plethora of collection accounts on your credit report, you'll probably be confused about whom you should pay. This could lead to you paying off an account with a collection agency that no longer owns the debt. Unfortunately, that payment can "vanish" into thin air. The collection agency that actually owns the debt will continue to demand payment and the collector that actually received the payment may conveniently have no record of receiving it. This cheats both the debt's actual owner and the consumer.

How Long Can These Multiple Collections Stay on Your Credit Report?

Federal law restricts collections to only seven years on your credit report. This seven-year clock begins on the date the debt first falls 180 days' delinquent. This generally coincides with the date that the original creditor charges off the debt and sells it to a collection agency.

All the collection accounts that appear on your credit report for the same debt must fall off when the original creditor's tradeline falls off. This means that some collection accounts may only remain on

After 7 years, all collections must come off.

your credit report for a few years---if that. For example, if a debt collector reports a debt six months before the credit reporting period expires, its tradeline won't stick around for a full seven years. In order to comply with the Fair Credit Reporting Act, the company must delete the tradeline in six months.

Is There Any Way to Remove Multiple Collections for the Same Debt?

I plan on making a more in-depth post about this soon and providing a step-by-step guide to help you get rid of any clone collections. For now, however, just know that you aren't stuck with these tradelines forever. The Fair Credit Reporting Act, which governs credit reporting practices in the U.S., provides you with a dispute process.

You aren't limited to only disputing incorrect information. You can also dispute information that is obsolete, such as multiple collections or accounts that appear on your credit report for longer than the credit reporting period allows. You can dispute via mail, over the phone, or even online. Just be sure that you dispute multiple collections as multiples. If your dispute goes into the system as an accuracy complaint, the collection agencies in question are a lot more likely to validate the accounts and they won't get removed.

Long story short, you aren't alone. It's very common for consumers who've had financial difficulty and ended up with several delinquent debts to discover that their credit reports reflect more than one collection account for the same debt. As tempting as it may be to ignore the hassle, removing any additional collections will help you maintain the best credit scores possible until the credit reporting period expires.

Related Posts:

How Much Do Medical Collections Affect Your Credit Score?

Improving Credit Scores After Collections

Removing Re-Aged Collection Accounts From Your Credit Report

Q&A: Collection Agency Sent Bills to Wrong Address

Hi Lee,

My name is Melissa and I came across your page form a google search. I am hoping you might be able to provide some guidance. 

In April, I received an email notifying me that there was a change to my credit report. There was a debt from 2010 (an ambulance ride to the ER) that was added. After some digging, turns out the account was sold in July 2010 to the collections agency. The agency is telling me they never received it until March 2011. Initial bills were sent to an address I haven't lived at in years, also had two other addresses on file, places I never lived, nor know anyone that lived or lives there. I have since began the dispute process. 

I am getting statements printed out from my bank from that time to see if there were any payments made to make sure this is in fact an unpaid debt. 

My question: Am I responsible after all this time? This is clearly an error on their part. At the time, I asked the hospital representative if all bills were set up on a payment plan and she verified that they were and I made monthly payments. If this was left off, why did it take 4 years for it to come to my attention? I live in NJ, however I am in the process of moving to NYC. The bill is for something that happened in Florida.

Any insight, recommendations or information would be greatly appreciated. Thank you!

--
Melissa 

Melissa,

The statute of limitations (which is the amount of time a creditor or debt collector can sue you for a debt) differs by state. In Florida, the statute of limitations is four years. In New Jersey and New York, its six years.

If you lived in Florida until July of 2014, the statute of limitations would expire and you would be free to move to another state without fear of getting sued--even if the new state's statute of limitations is much longer than Florida's.

The problem that arises here is that, if you move before the statute of limitations expires, the SOL is "tolled" in your original state of residence. That means that, as soon as the collection agency discovers that you are no longer living there, the clock on the statute of limitations just stops ticking. When and if you move back, the statute of limitations goes back into effect and begins to time out from where it left off when it was tolled.

If the collection agency was not aware that you moved out of Florida until now (and you didn't give them the date that you moved when you spoke with them) its very possible that the statute of limitations was never tolled and simply timed out on its own. That would mean you're safe no matter which state you move to. If the addresses the collection agency was sending letters to were in Florida and you didn't disclose your new address until after July 2014, you should be safe from a lawsuit.

If, however, the collection agency is aware of the fact that you moved, they can generally opt to go by the SOL in your current state. This is advantageous to the collector, since they'd have until July of 2016 to collect the debt. Now, this part is important, so listen well:

The date that the collection agency originally received the debt is irrelevant. The only date that matters is the date you made your last payment (or, if you never made any payments, the date that your payment was originally due). It makes no difference whatsoever that the collector didn't get its hands on the account until 2011. The SOL and the credit reporting period are calculated using the dates from the original account.

 If a collection agency could use its own dates to determine the statute of limitations and the credit reporting period, no one would ever be free from collection lawsuits and bad debts would hang around on your credit report indefinitely. So don't worry about the date they bought the debt or first reported the debt. It just doesn't matter.

You mention that you are contacting your bank to determine if you made any payments on the debt. Normally making a payment on the debt restarts the statute of limitations from scratch. In Florida, however, you have to provide the creditor with a written promise to pay in order to restart the clock (Just for reference, the same is true in New York). So unless you promised to pay the debt in writing, the SOL was never interrupted and may have timed out in Florida.

The statute of limitations and the credit reporting period are two entirely different things. The credit reporting period begins 180 days after your last payment and lasts for seven years. As I stated above, the date the collection agency bought the debt or originally reported the debt doesn't matter. They have to remove it after the credit reporting period expires. The credit reporting period is the same no matter which state you live in.

Your responsibility for the debt is a gray area. Technically, if you took the ambulance ride and the debt is legitimate, you are responsible for paying the debt no matter how many errors the hospital or collection agency made when trying to collect it.

You said you spoke to a hospital administrator that assured you all bills were set up on a payment plan. If you have that in writing, that gives you grounds to fight this. You'll still be responsible for paying it, but you can probably use that statement to convince the hospital to pull the debt out of collections (and no matter what they tell you, they CAN pull the debt out of collections--even if the account was actually sold and the debt collector isn't working on a contingency) and remove it from your credit report. If all you have is someone's word, you lack proof that this was a legitimate error. It's also possible that the ambulance company bills separately from the hospital itself and that's what caused the issue.

If the ambulance company does not bill separately from the hospital and you have a statement in writing from the hospital noting that all of your debts have been added to a payment plan It could be argued that, if they hadn't made these errors, you would have paid the debt before it ever hit your credit report. In general, however, you aren't absolved from your responsibility to pay a debt simply because you didn't receive a bill.

If the statute of limitations has expired, you are no longer legally responsible for the debt and they can't force you to pay it. Keep in mind that the collection will remain on your credit report regardless of whether you pay the debt or not, and paying a collection account does not improve your credit scores. You do have the right to dispute the debt both with the collection agency itself and the credit bureaus.

If you have the funds to do so, you might consider hiring a consumer law attorney to help you. I don't know the full details of your case, but the original creditor obviously made some blatant billing errors that cost you your good credit rating. A good attorney should be able to help you straighten this out, even if it means filing a lawsuit or two to strong-arm the hospital into taking you seriously and recalling the debt.

One last thing, while you're disputing the collection you should also consider disputing those addresses on your credit report for places you never lived. You don't want another creditor to bill you at one of those addresses only to have this nightmare scenario repeat itself.

Best of Luck
Lee

Q&A: NCO Re-aged Collection Debt on Credit Report/International Identity Theft

Lee,

I found your info by googling NCO Collection Agency.

I am a United States citizen living in Canada.  I moved here in Dec. 2002 and would visit home every few months as my parents were both ill and were both deceased in just over three years.  There is a collection account on my credit report that I didn't recognize at first.  I injured myself in the 3rd week of January 2006.  My father died on Jan. 28, 2006 and it honestly slipped my mind.  Quite frankly, it took me until this past April to even remember I had been hurt.  Now, there's this entry that shows NCO "opened" it on Aug. 16, 2007 and a "report" date of May 17, 2009.  To date, I have not been contacted by them. 

I was reading your comment to Lisa dated June 19, 2014 on collectionagencydebt.blogspot where you stated, "If the original default date was more than seven years and 180 days ago this shouldn't be on your credit report at all and you should be able to get it removed as obsolete." and wondered if this also applied in my case. 

Further complicating matters, someone in my hometown has apparently obtained cell phones under my name and social security number and (according to the credit reporting agencies) a mortgage.  It is one of the security questions and when I reply I have "no mortgage", I get an "incorrect answer" and a phone number to call.  My friend is the retired Chief of Police in my hometown and informed me that until I move back home, there is nothing that can be done from here.

Any advice you have to give is appreciated and I thank you for your time.

Sincerely,

Nancy

Nancy,

The seven-year credit reporting period is the same for everyone. so what I told Lisa would also apply to you. Debt collectors generally have to remove their negative tradelines when the original creditor removes its charge-off. Unfortunately, you owe a medical debt, and medical debts don't come with an original creditor. Particularly insidious collection agencies use this to their advantage. The original creditor's report is the yardstick that both you and the credit bureaus can use to determine if a collection is obsolete. Medical debts don't appear on your credit report if they're paid on time, so there is no original account for the debt on your credit report. Without an original creditor account on file, the burden of proof is on you to demonstrate that the collection agency is in error. 

Here's a fun fact for you. The Federal Trade Commission already hit NCO with the largest business fine in history for altering collection accounts dates to ensure they remain on debtors' credit reports far beyond the seven-year limit. The clock on the credit reporting period should start ticking when you stop paying the original creditor--not when the collection agency receives the debt. 

If you dispute this directly with the credit bureaus, NCO will probably verify it as accurate. What you want is some proof that the original debt was incurred in 2006, not 2007. An old medical bill for your injury that notes a late payment and how late the payment is (i.e. 30 days late, 60 days late, etc.) should work just fine. You can also check with your insurance company or the original medical provider for the date of service. The hospital records may not go that far back, but your insurance company might. It can't hurt to try.

Black out any information you don't want to share with NCO on your documents of proof (the details of your injury, for example, are none of their business) and make a photocopy of each item you're using as documentation. Highlight the date. Also print and photocopy the credit report pages from each of your credit reports that reflect the error.

Write NCO a letter stating that the account they are reporting to the credit bureaus is obsolete. Note exactly when you incurred the debt and refer to your medical paperwork as evidence. Point out that you never made any payments on this debt, thus the date of delinquency occurred in 2006, not 2007 and the debt should no longer appear on your credit report. Tell them that re-aging a debt is against the law, and that you have the right to sue (and will exercise this right) if they don't immediately delete this tradeline from your credit report. 

If they don't delete, make photocopies of the same information you sent to NCO and send the proof, along with a letter explaining that this debt is obsolete and must be removed, to each of the credit bureaus whose files reflect the collection. If you want to make absolutely certain that your dispute falls into human hands and doesn't get shuttled into the computer system (the computer system neither acknowledges or analyzes your evidence) write out the letter by hand. Make sure to send both the NCO dispute and all credit bureau disputes via certified mail, return receipt requested. 

I have to wonder though....why does this matter? You're living in Canada. I used to live in Canada. American credit doesn't mean squat over there. Although they have the same credit bureaus, their credit system is based on Social Insurance numbers, not Social Security numbers. You can't pull an American credit report using Canadian credit bureaus. Their system simply isn't set up that way. 

On to the case of identity theft. Identity theft is serious business. Most debts don't follow you to Canada, but if the identity thief racks up enough of it, sooner or later a creditor is going to find you and outsource that debt to a Canadian collection agency which will hunt you down on your home turf in Canada. Don't let this happen. 

You need to file a police report. I think what your policeman friend meant wasn't that you had no course of action to defend yourself but rather you can't fill out an identity theft report with the U.S. police. Go down to your local police station, explain that your identity was stolen and ask to fill out a police report. You can use a Canadian police report the same way you would use an American police report. Use your Canadian police report to file an identity theft complaint with the credit bureaus. 

Make sure to point out that the report was filed in Canada because that it where you're currently living. You don't want the credit bureaus to think that you're a Canadian citizen and dealing with Canadian identity theft concerns yet somehow reported the theft to the wrong bureaus. If that doesn't work (I can't see any reason why it wouldn't unless you keep running into idiots who don't know what they're doing. Believe it or not, the credit bureaus employ scores of these people) Wait until your next trip to the U.S. and fill out a police report about the identity theft there. According to the FTC, you can file a police report either with the police station where you live or the police station where the identity theft occurred. 

You'll also want to place a fraud alert on your American credit reports pronto. The following resource from the Federal Trade Commission should provide you with a detailed guide on exactly what to do when you find out your identity has been stolen: Federal Trade Commission: Identity Theft. 

I'm going to list some numbers for you to call if you run into problems along the way. 

• Federal Trade Commission headquarters: (202) 326-2222
• Experian:  1 (888) 397-3742
• TransUnion Identity Theft Department: (800) 680-7289
• Equifax fraud alert: 1-888-766-0008

If you are financially able, consider contacting a consumer law attorney within the U.S. You can do what's necessary to take care of these issues on your own, but its time consuming and extremely stressful. A good consumer law attorney has extensive experience doing this very thing. In addition, collection agencies and credit bureaus alike take lawsuit threats from an attorney much more seriously than lawsuit threats from the debtor. You also have to consider that this person committed a major fraud by purchasing a house in your name. You would retain the right to file a civil suit against the individual and force them to pay for your attorney. 

I cannot stress this enough: Do NOT ignore this. DO NOT. If this person has gotten a mortgage in your name, she knows that you are living out of the country and plans to simply live as you indefinitely. Someone has to bring her to justice. A fraud this significant can carry jail time and, lets face it, this lady belongs behind bars so that she can't turn around and do this very thing to someone else. 

Best of Luck,
Lee

Q&A: Does Agreeing to Pay Collections Restart the SOL?

Hi Lee,

I have two negative reports on my credit report, they are both supposed to fall off in 2 years. I made the mistake of calling both collection agencies, and agreed to make payments in the next couple of months. I can certainly pay them, however, I am worried that paying the full debt may reactivate the 7 year negative credit history. 

Can agreeing to pay the debt restart 7 year negative history? These accounts are so old, I have no record of any paperwork, and no one can seem to tell me the exact date of first delinquency. 

Should I just pay the full debt, have them agree to report to credit bureaus as 'paid in full?' Will this help my score and to have it removed from my report when the 7 yrs is up?

Thanks for any advice you can offer.

--Jenny


Jenny,

You're confusing the statute of limitations for lawsuits with the credit reporting period. The statute of limitations is the amount of time a collection agency has to sue you and the credit reporting period is the amount of time an item can remain on your credit report. These are two entirely different time periods.

Making a payment on a debt that's in collections does NOT restart the 7-year credit reporting period. The clock starts when the debt first becomes 180-days delinquent. Although you may not know when the date of first delinquency occurred, pulling your own credit reports should show you when the negative entries are scheduled to be removed from your credit report. If it were me, I'd pull my credit report right now and print it out. That way, if the collection agency (or any other debt collector that may purchase the debt in the future) decides to "re-age" the debt and reinsert it onto your credit report, you'll have rock solid evidence to provide to the credit bureaus proving that the debt in question is obsolete and should be removed.

Unfortunately, making a payment on your debt does have one very negative effect: It restarts the statute of limitations in most states (in some states you must agree in writing to make a payment before the SOL begins anew). Once the statute of limitations is back in force, the collection agency regains the right to sue you. You don't mention which state you're in (the SOL differs by state) but you did mention the debts are old. Thus, its likely the statute of limitations has already expired.

Agreeing to pay collections--and then following through with that promise--can be a very risky prospect if you're not paying the debt in full all at once. This is because, unless you have a written agreement with the collection agency that says otherwise, the company has the right to file a lawsuit against you as soon as the statute of limitations kicks back into gear--even if you haven't missed a single payment. As it stands, if the SOL has expired, the collection agency's hands are tied. They only get the money if you pay voluntarily.

So don't panic. It's easy to become intimidated by a debt collector and agree to pay a debt when you can't (or shouldn't), just to get off the phone. The good news is that agreeing to pay won't likely hurt you. If you weren't merely intimidated and you genuinely want to take care of your debt, make sure that you secure a solid agreement, in writing, with the collection agency that stipulates the company agrees not to sue you unless you miss a payment.

Wanting to take care of unpaid debts is admirable, but be warned: paying off collections does NOT improve your credit scores. Collection accounts have the same negative impact on your scores whether they're paid in full or you've never paid a dime.

In my opinion, paying this debt is pointless. It doesn't help your credit and the credit reporting period doesn't change. Whether you pay it or whether you don't, it will still remain on your credit report for another two years.

Best of Luck,

Lee

How Much Do Medical Collections Hurt Your Credit Score?

No one, unless they're sporting a major case of Munchausen, wants to find themselves hospitalized. It's just too expensive. Even people with insurance are often responsible for co-pays and co-insurance charges that far exceed what they're able to pay. As a result, it isn't uncommon for medical debt to end up in collections. Roughly 50 million people in the U.S. are currently making payments on some form of medical debt. Many don't succeed--making medical bills the number one cause of bankruptcy in this country.

If you're one of the many Americans living paycheck to paycheck, paying off exorbitant medical bills may not be an option. Ignore your medical debt, however, and it will eventually end up in collections and damage your credit scores. This is the choice that thousands of Americans are faced with: go without necessities in order to make payments on medical debt or let their credit scores take a hit.

How Do Unpaid Medical Bills Affect Your Credit Scores?

If you don't pay off your medical bills, the doctor or hospital you owe will eventually turn your account over to a collection agency. The collection agency's task is to collect as much of the debt as possible. The collection agency keeps a percentage of whatever they collect as payment for their services.

A medical emergency may cost you your good credit.

Hospitals and doctors' offices don't report your debts to the credit bureaus. Even if you set up a payment plan and faithfully adhere to that plan, the payments you make toward your medical bills don't show up on your credit report and help boost your credit scores. As unfair as it sounds, the only impact medical debt can have on your credit report is a negative one. Collection agencies routinely report their accounts to the credit bureaus. Collection accounts are always negative and will significantly damage your credit scores. Paying off the debt doesn't change this. Paid medical collections are just as damaging to your credit rating as unpaid ones.

How Much Medical Collections Hurt Your Credit Scores

The affect any item--positive or negative--has on your credit scores depends on how good or bad your credit is when the item initially appears on your report. The better your scores are when a medical collection appears on your report, the more credit points you'll lose. I'll give you some ballpark figures, but none of this is set in stone. In other words, your mileage may vary.

On average, a collection account of any variety will cost your credit score about 100 points. If you have excellent credit, expect your scores to take a bigger hit. The opposite, of course, is true for those with bad credit. If your credit is already in shambles, you may lose only 50 points--sometimes less. Time also plays a big role in the impact a medical collection has on your scores. The older a collection account is, the less it affects your credit.

How Long Does Medical Debt Stay on Your Credit Report?

Medical collections remain on your credit report for seven years. The original delinquency date generally won't show up on your credit report. What will show up is the date the collection agency first reported your medical debt to the credit bureaus. That date has no impact whatsoever on the date the credit bureaus must remove the item. The date of removal is set in stone regardless of what state you live in or whether or not you've ever made a payment on the debt.

The exception to this rule is if the collection agency sues you and wins a judgment. A judgment will remain on your credit report for either the amount of time that the judgment is enforceable in your state or seven years, whichever period is longer. In addition to giving the collection agency a wider range of debt recovery options, judgments also do significant damage to your credit rating.

Medical Collections Often Carry Less Weight With Lenders

Now for the good news. (Didn't think there was any of that, did you?) Lenders who pull and review your full credit history often place less importance on medical collections than other types of collection accounts. This is because a medical collection on your credit report doesn't scream "I'm financially irresponsible!" like, say, a defaulted credit card. Lenders know that medical emergencies are out of your control. Thus, even though the medical debt shows up on your credit report and hurts your scores, it may not be an obstacle with some lenders.

There are exceptions to this rule as well. If the debt is still within your state's statute of limitations, your lender has the right to turn down your application until you either pay off the debt or the statute of limitations passes. This is nothing more than the lender protecting its own interests. After all, no lender wants to finance an item that can be liened or seized due to an unpaid medical collection.

Related Posts:

Can a Doctor or Hospital Send Medical Bills Directly to Collections Without Notifying You?

Keeping Medical Debt Out of Collections and Off Your Credit Report

Debt Collection Lawsuit Statute of Limitations By State

Q&A: Has My Credit Card Debt Been Re-aged?

Hi Lee, 

I've been reading your Collection Agency blog. Thank you so much for doing this- it's been very helpful. 

Seven years ago, I defaulted on my credit cards due to a long period of unemployment.

Much of this debt should have fallen off my credit report in April and the SOL expired in my state in 2011 for some of the debt and 2012 for the rest of it. I stopped making most of my payments in March 2007. The Credit Bureau told me that it depends on when the creditor reports me as delinquent. 

In 2012, I disputed a few instances of re-aged debts with the Credit Bureau, but they told me at the time not to worry about the collection account's difference in reporting dates-- that they knew the original creditor's date of first delinquency, and that the collection agency's date of reporting didn't matter. When I contacted them again this April to ask why the debt hadn't fallen off my report, they claim to need information to make a change to the report. Should I send them the copy of that dispute I made in 2012? I am not sure what to do. I assumed the debt would fall off automatically. In one case, the date of first delinquency is reported as 2009, but that's well over 2 years after I stopped paying.

Equifax said the debt remains for 7 years, but I've read some blogs that say 7.5 years, so I'm confused on this. What is considered the first 'delinquent' date? In California for purposes of the SOL, it is considered the last time you made a payment. Would this be considered the Date of First Delinquency to the Credit Bureau? Or would it have been when the cards were 180 days past due? I know I was reported with a 30 day late in April 2007.

Thanks so much for your advice. 

Beth

Beth,

The credit reporting period works like this: Federal law requires the credit bureaus to remove your delinquent debts after seven years, but the seven-year clock doesn't even start ticking until your debt is 180 days old. The clock for the 180-day period begins ticking on the date of your last payment. The reason it takes 180 days to start the 7-year reporting period is that the 180-day mark is the point where most credit card companies "charge-off" the debt. That doesn't mean the debt is gone, of course, its simply to get the bad debt off that year's books for accounting and tax purposes. 

Of course, during this 180-day period, the debt is probably going to show up as delinquent on your credit report. That means that, although the credit reporting period is technically only seven years, its normal for a debt to hang around on your credit history for 7.5 years before being removed. 

If your debt was 30-days delinquent in April of 2007, that means that the credit reporting countdown didn't begin on the debt until September of 2007. Thus, don't expect the credit bureaus to remove it until September 2014. And they were right to tell you that they know the original delinquency dates--they do. The original creditor's automatic reports to the credit bureaus always contain dates. These dates don't always show up on your credit report, but they're there. The dates you see on your credit report for collection accounts generally reflect the date the collector first received or first reported the debt--not the original date of first delinquency from the original creditor. 

The statute of limitations for lawsuits is a totally different beast from the credit reporting period. The statute of limitations refers to the period of time in which a creditor can sue you for the debt. The statute of limitations for debt is calculated from the date of your last payment, and it doesn't carry the same 180-day "waiting period." The bad news, of course, is that if you make a payment you restart the clock on the statute of limitations and the collector regains the right to sue you. Making a payment does not, however, have any effect on the 7.5 years that a negative item will remain on your credit report. 

Long story short, you don't need to send the credit bureaus anything. Their computer system has the original dates on record and should automatically remove the original creditor's tradeline and the collection account attached to the debt in September. Just to be safe, consider pulling your free credit reports this October to ensure that both negative accounts are gone. 

Best of Luck,

Lee 

Related Posts:

Removing Re-aged Collection Accounts From Your Credit Report 

Credit Reporting Period vs. Statute of Limitations

Can You Reset the Statute of Limitations on a Debt?