Does the Deletion of a Collection Account Affect Your Credit Score?

No one wants to see a collection account marring their credit report, as collection accounts lower your credit rating and pose a red flag for lenders who review your credit history. While collection accounts are detrimental, they do not remain a part of your credit profile indefinitely -- forever causing you trouble when you apply for loans and credit cards. The credit bureaus eventually delete your collection records, and this deletion has an impact on your credit score.

Reporting Period

Collection accounts, like all information on consumer credit reports, have a set reporting period beyond which the credit bureaus must delete the data. The Fair Credit Reporting Act sets the reporting period for all collections at no more than seven years. The reporting period starts 180 days after your last payment to the original creditor -- not on the date the collection agency first receives your account or the date the collection agency originally reports the account to each credit bureau. Nothing you do can inadvertently extend the reporting period.

Collection Account Deletion

Although the credit bureaus delete collection accounts after seven years, some individuals have success having those derogatory listings removed early by either disputing them with the credit bureaus or directly with the collection agencies reporting them. Federal law gives all individuals the right to dispute incorrect information they find within their credit histories. Thus, if a collection account on your credit report does not belong to you, contains errors, or appears on file after the reporting period for the account has expired, you can file a dispute with the credit bureaus either by mail, by phone or online and request that the listing be removed from your report.

Credit Scores

All of the information on your credit report contributes to your credit score, and collection accounts are no exception. Because everyones credit report differs, there is no way to estimate how deeply a collection account will hurt you when it first appears on your credit file or how much your credit will improve when the credit bureaus delete the entry. You can, however, expect your credit to markedly improve when a collection account is finally removed from your report.

Rebuilding Your Credit

You dont have to wait for the credit bureaus to delete past collection accounts to improve your credit rating. Whether you pay your current creditors on time has a greater impact on your scores than any other information on your report. Thus, you can slowly rebuild your credit by always paying your debts in a timely manner. If you carry credit cards, maintaining a low balance on your credit card accounts will also help you rebuild your credit rating until the credit bureaus remove old collection accounts from your credit record.