When you fail to pay a bill--whether it is a credit card account or a doctor's visit--the creditor will likely eventually turn your account over to a collection agency. These instances can negatively impact your credit report for seven years.
Time Frame
Collection accounts are usually noted on your credit reports for seven years from the date the original obligation was not met, according to the Fair Credit Reporting Act.
Misconceptions
Paying the collection account does not automatically remove the entry; it simply updates it as "paid." The account will still be reported for seven years from the original delinquency date.
Impact
Experian, one of the three major credit reporting agencies in the United States, notes that a collections entry is as "negative as it gets, short of bankruptcy."
Effects
Having a collections record can make it much more difficult to get future credit cards, car loans, personal loans and even some apartments or jobs.
Your Rights
A collection agency cannot harass you or it risks violating the Fair Debt Collection Practices Act. For example, the agency cannot call you before 8 a.m. or after 9 p.m.
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