Why is my “Paid in Full” collection account still showing on my credit report?

Many people are under the impression that when a collection account is canceled, it is removed from their credit report. Unfortunately, that is not the case!

Companies that are members of all three credit reporting agencies (Equifax, TransUnion, and Experian) have agreements to accurately report data to the agencies. Punctual payments, delays and cancellations. If the company is a member of an office, it agrees to accurately report its information to the offices.

If you become seriously delinquent on a debt, your debt will be assigned to a collection agency or sold to a debt buyer. If the original creditor (the one who loaned you the money) is a member of the credit reporting agencies, that company will report it as 30 days late, 60 days, 90 days, 120 days, and 150 days. At 180 days, your debt is reported as canceled and sold or assigned to the collection agency.

Your balance with the original creditor drops to $ 0 because you no longer owe the money.

If you pay the collection agency in full, they will tell you that you were in collections but paid in full. This is accurate. Data accuracy is mandated by the FCRA (Fair Credit Reporting Act).

Fair Isaac is the company that generates the FICO score. This is the credit score most often used by lenders when determining whether to lend money, the interest rate on the loan, whether or not to rent an apartment, etc.

FICO9 is the newest version. Now differentiate between medical debt and other debt (so medical debt doesn’t affect your score as much).

The big difference now is that paid collection accounts no longer affect your score. Without paying he still does. So people are finally seeing some kind of payoff when they pay off or even pay off their non-medical debt in collections.

FICO9 update

Having bills paid no longer hurts your credit score like unpaid bills. And credit bureau members can meet your requirement to accurately report accounts.

Many people try to get these paid collections out of their reports. Before FICO9, this made some sense because collection accounts paid were treated the same as unpaid accounts. Now this is a moot point for your credit score.

Under the FCRA, you have the right to remove any inaccurate information from your credit report. If you had a collections account, this is an accurate report, regardless of whether it was paid in full or not. Therefore, these accounts will remain on your credit report for seven years from the original delinquency date.

Even if the collection account was deleted, the original creditor would still show as Void, so your score will still be negatively affected.

The bad news is that canceled debt collections will stay on your credit report. The good news is that under FICO9 it will no longer affect your credit score as it would if the debt were not paid.

Leave a Reply

Your email address will not be published. Required fields are marked *