How Often Do Collection Updates Get Updated on Credit Reports?

Your credit reports are updated continually and reflect your credit use, including open and closed accounts, credit lines and balances. Perhaps most importantly, the reports show whether you pay bills on time and if you have ever let an obligation lapse until it was charged off or sent to a collection agency. Collection accounts and other delinquencies make it very difficult to open new accounts.

Definition

A collection account is a bill that gets turned over to a debt collector because the original creditor is unsuccessful in getting you to pay. Credit card issuers and other lenders usually attempt to collect their money for up to six months. Sometimes your creditor will sue you, but often your bill gets written off, which gives the lender some tax benefits. Many lenders then sell their noncollectable accounts to professional collection agencies, which buy them cheaply and profit by collecting the full owed amount or as much as they can.

Credit Report Impact

Your lender reports account activity, including charge-offs, to the Equifax, TransUnion and Experian credit bureaus, where it gets added to your credit reports. Debt collectors are also allowed to put their accounts on your records, which further hurts your credit score. The credit bureaus continually update their data through computerized systems, so collection accounts appear on your records shortly after being turned over to debt collectors. Their negative impact begins as soon as they show up on your credit reports.

Updates

Your three credit reports are updated whenever the collection agency reports new information on your account. For example, if you make payment arrangements, the entry should reflect a falling balance as you send in your money. You get a judgment added to your records if the debt collector successfully sues you. The information remains static if you do not pay and the collection agency does not take legal action, and the account is automatically removed from your reports in seven years.

Considerations

Collection accounts inhibit your ability to get credit, even if they reflect payments or a paid-in-full balance. Negotiate with debt collectors for complete removal of such accounts when you make payment arrangements. This erasure is the only way to salvage your credit before the seven-year reporting period ends. Agree to pay either a lump sum or to make payments for a mutually agreeable amount and duration. Most debt collectors will accept less than your original balance because they still make money on the account. Get a written promise that your credit reports will be updated with complete removal of the account when you fulfill your part of the bargain. Erasure should happen within a month or two of that time.