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Can collection agencies keep updating credit reports?

A collection agency can continue to update the account on your credit reports up to the date the reporting time has expired.
collection-agency-keeps updating-credit-report
collection-agency-keeps updating-credit-report

I disputed a medical bill that was removed from Transunion, However Experian never reported it but now, all of a sudden, it’s reporting it and Equifax seems like my account is being re-aged. If I dispute an item can they do an update on that collection account?

-Reader Question

Can a collection agency keep updating on your credit report?

The short answer is yes, a collection agency can continue to update the collection account on your credit reports until the 7-year reporting time of the original debt has expired.

Why collection agencies update accounts on credit reports?

There are several ways collection accounts can be updated on credit reports:

1. Date of Last Activity

When you dispute an item, the Date of Last Activity (DLA) can be updated. The date of last activity can change anytime there is new activity on your account. That could be a credit dispute, increase in balance or a payment. Any activity, including a collection agency updating an account balance, can precipitate a change to the date of last activity.

When the balance on a collection increases on a monthly or quarterly basis, it is the debt collector’s responsibility to update the balance on the consumer’s credit report to ensure accuracy. However, updating the Date of Last Activity can potentially result in a lower credit score due to the recent activity.

2. Open Date Can Update

Collection agencies can report the “Open Date” for their collection account as the date that they received collection authority, either by way of assignment from the original creditor, or when they purchased the debt. The “Open Date” is unrelated to any date pertaining to the original creditor and has no impact on the exclusion date the collection account will be deleted from your credit reports.

3. Strategy to get you to pay

Collection agencies will sometimes regularly update the collection account as a strategy to get payment or to encourage settlement of the debt. As time progresses the negative impact of collection accounts on credit scores diminishes; but updating a collection accounts causes the account to look more recent. The only way to stop collection agencies from updating accounts is pay it off entirely.

What you should know about the date of delinquency

The date of delinquency refers to the date reported by the original creditor when you first become delinquent and no other payments were made; it is very different from the date of last activity. 

The date of delinquency is also referred to as the Date of First Delinquency (DOFD). Here are two important facts about the delinquency date:

  • The collection agency regularly updating your credit report has no impact on when the account is due to be purged (excluded) from your credit reports which is based only on the reported DOFD.
  • A collection agency has no legal authority to change the DOFD, it is set in stone. If someone changed the DOFD, it would be re-aging an account which is a gross violation of federal law.

You don’t have to necessarily worry about the date of last activity, open date or last date reported. These dates can change. However, the DOFD cannot change. For example, if an account went delinquent in June of 2017, the account should be excluded (purged) from credit reports on or about June 2024.

Does paying off collection accounts improve credit score?

No, paying off a collection account will not immediately improve your credit score unless you negotiate a pay for delete agreement. The reason for this is the FICO scoring models used by 90% of top lenders considers both paid and unpaid collections as significant derogatory marks on your credit report.

Consequently, even if you settle the collection, it’s still regarded as a major derogatory item unless a pay for delete agreement is completed. Therefore, paying off a collection is unlikely to have an immediate positive impact on your credit score if the scoring model utilized is FICO 8 or an earlier version.

There is an exception with the FICO 9 scoring model. If lenders use FICO 9, collection accounts that are marked as “paid in full” on a consumer’s credit report are disregarded in credit score calculations.

The problem is that FICO 9 was introduced to consumers in 2016 and as of the current year, FICO 8 remains the most widely used credit scoring model.

Should you pay off a collection account even if it’s not deleted?

Paying off a collection account, even though it can remain on credit reports, may have some positive effects. For example:

Updated account status

When a collection account is paid the status is updated to reflect that payment. This demonstrates responsible financial behavior and can be viewed more favorably by lenders and even banks when attempting to open accounts. Lenders and banks don’t want to see derogatory items on credit reports. While having derogatory credit doesn’t guarantee that your applications will be denied, it certainly makes the approval process more challenging.

The presence of derogatory items can have several implications and outcomes:


  1. Difficulty in obtaining approval. Lenders and creditors are more cautious when considering applicants with derogatory credit. Your chances of getting approved for credit or loans may be lower compared to someone with a clean credit history. For example, some of the best cash back credit cards and the lowest interest rate loans are typically reserved for people with the best credit scores.

  2. Checking accounts with monthly maintenance fees. There are some bank accounts for bad credit but they may come with monthly service fees.

  3. Higher interest rates. If you’re approved for credit with derogatory credit, you may be subjected to higher interest rates. Lenders perceive individuals with negative credit history as higher risk borrowers, and they may compensate for this perceived risk by charging you more in interest.

  4. Requirements of down payments or security deposits. In some cases, lenders or landlords may require you to make a down payment or provide a security deposit to mitigate the risk associated with your derogatory credit. This ensures that they have some form of financial protection if you fail to fulfill your obligations. Security deposits don’t typically earn you interest of any type, even when required for secured credit cards. That’s just money sitting in someone else’s account earning compound interest.

Reduction in outstanding debt 

Paying off a collection reduces your outstanding debt load, which can positively impact your credit utilization ratio. Credit utilization is the amount of credit you’re currently using compared to your total available credit. Lower utilization ratios generally result in higher credit scores.

Rebuilding trust and demonstrating responsibility

By resolving and paying off a collection, you show creditors that you are taking steps to fulfill your financial obligations. Over time, this can help rebuild trust and positively influence your creditworthiness. In fact, if you’re planning on applying for a mortgage loan, some lenders will not work with you unless collection accounts are paid. Lenders may ask for proof that a certain amount in collections has already been paid or prove that a repayment plan is in place.

Strategies to counteract collection accounts

  • Open a credit card account. Opening a new credit account might help you improve your credit score because it can increase your available credit. The key is to keep the new credit account balance, as well as existing credit account balances low so that your available credit stays high. This is known as your credit utilization rate. For the best impact on your scores, keep your credit utilization as low as possible (under 30% or less). If your credit scores are shaky, credit card issuers like the Destiny Mastercard are designed for people with less than perfect credit.
  • Establish strong payment history. Payment history comprises 35% of your credit score, making it the No. 1 influence on your credit. When you open a new credit line, you have a chance to build up a history of on-time payments by paying your bill by the due date every month.
  • Use a Debit Card That Reports to Credit Bureaus. Extra is a debit card that reports payments to credit reporting bureaus Experian and Equifax. The Extra debit card connects to your checking account. Any purchases you make with the Extra debit card will be totaled at the end of the month, then Extra will report your card transactions to the credit bureaus Equifax and Experian as paid in full.

» Learn more about Extra

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