Can Collection Agencies Keep Updating Your Report?

Experian, TransUnion and Equifax are the three primary consumer credit reporting agencies whose business model relies on compiling consumer credit information. These three agencies report account listings from original creditors, debt buyers and collection agencies. Your credit report may consist of multiple negative entries tied to one original credit account.

FDCPA & FCRA Regulations

The FDCPA --- Fair Debt Collection Practices Act --- regulates debt collection agency and debt buyer collection activities. The FCRA --- Fair Credit Reporting Act --- defines consumer's rights in relation to the type and longevity of the information listed in the credit report. The FTC --- Federal Trade Commission --- enforces the FDCPA and FCRA regulations. The FDCPA allows collection agencies to add updated information to your credit report, as long as the information complies with the regulations outlined in the FCRA.

Reporting

Collection agencies are allowed to report credit accounts to all three credit reporting agencies as collection accounts, charge-offs and delinquent accounts. Collection agencies are legally allowed to increase the indebted amount by adding interest, attorney and court fees to the balance. The original creditor is also legally allowed to report the delinquent or charged-off account, which results in a separate entry on your credit report. When the original creditor charges off the account and sells it to a debt buyer or turns it over to a collection agency, the charged-off amount does not increase. The debt buyer or collection agency can update your report with a new amount each month.

Timing

Collection agencies, debt buyers and original creditors may list negative information on your credit report for seven years, according to the FCRA. Your obligation to repay the debt does not expire after seven years, but the negative account listing does expire. The reasoning behind the statute of limitations is to allow a consumer's credit rating to recover from unfortunate financial decisions. A credit report is a snapshot of a consumer's level of financial responsibility at a given point in time.

Consequences

Collection agencies and debt buyers keep updating credit report listings as a method of compelling consumers to pay the debt. These third-party agencies are not allowed to change the date of the original delinquency, but the outstanding balance may differ from the balance listed as a charge-off by the original creditor. Interest and other fees may legally accrue on unpaid balances that account for the difference in the total outstanding amount owed. Even if consumers pay the collection agencies, the negative account listings may appear on the credit report for up to seven years. Consumers should negotiate negative account listing deletions as part of paying off the collection agency.