Your credit report continually changes as creditors add new information and the credit bureaus remove outdated information. Because collection accounts eventually fall off consumer credit reports, your unpaid debts will not haunt your credit history forever. However, evidence of unpaid debts can linger in your report for longer than a collection account.
Under the Fair Credit Reporting Act (FCRA), collection accounts only appear on your credit report for 7.5 years from your original default date. Because most creditors do not turn unpaid debts over to collection agencies until the accounts remain delinquent for 180 days, collection accounts will typically appear on your credit files for no more than seven years. If you notice outdated collection accounts when reviewing your credit history, you can ask the credit bureaus to remove these obsolete debts from your files.
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When filing reports with the credit bureaus, all information providers must report the date on which the original creditor initially classified the debt as delinquent. This allows the credit bureaus to remove the account at the proper time. Unethical collection agencies sometimes intentionally modify account dates, which prevents the derogatory accounts from falling off a consumer's credit report within the appropriate time frame. This practice is known as "re-aging." The Federal Trade Commission encourages consumers to report incidents of re-aging, as it reserves the right to fine or even revoke the business licenses of collection agencies who participate in this practice.
Subsequent Collection Accounts
If a collection agency cannot recover a debt, it will eventually sell the unpaid account to another agency. If a debt collector purchases a debt on which the federal reporting period has already expired, it cannot make a fresh report to the credit bureaus without altering the account dates. However, it can make a subsequent report in addition to the original collection agency's notation. Provided the reporting period is still in effect, this can result in a consumer's credit record displaying two collection accounts for the same debt. This skews the credit-scoring formula by indicating that you allowed two debts to fall into delinquency rather than one. Fortunately, you can dispute a multiple collection record, and ask the credit bureaus remove it.
Although collection accounts have a maximum reporting period of 7.5 years, debt collection judgments can appear for ten years or longer depending on the judgment enforcement period in your state. For example, if a collection agency seeks a judgment against you in court, the resulting judgment on your credit report will appear as evidence of the collection debt long after the credit bureaus have removed the collection agency's original report.