What impact will a collection account have on my credit score and creditworthiness?
Having a debt in collections can really hurt your credit score
Unfortunately, if you are falling behind and struggling to make your payments on a credit card account or loan and the lender put your debt out for collections it will have a devastating short-term effect on your credit score.
Initially, when a collection first posts on your credit file, your score will probably drop over 100 points or more.
Over time, the negative impact of your collection account will diminish. After about 6 months your score can start to rebound as long as you are paying all of your bills on time and you do not have any other new derogatory information being posted to the credit bureaus.
In a few years, you will probably be able to get an auto loan, credit card, or mortgage but you will surely get higher interest rates as you will still not be deemed as the most trustworthy qualified buyer.
Getting the collection account removed and fixing your bad credit as soon as possible would be the best way to recover from a collection account.
Why did my paid collection remain on my credit report?
Unfortunately, if you did not negotiate a pay for delete when you made your payment with the collection agency or you did not set up some other sort of arrangement to have collection removed when you made your payment, the collection accounts whether they are paid or not will usually stay on your credit report for seven years. The seven years start from the actual date when you missed your first payment.
The good news is that there are a few strategies that you can try to have your paid collection removed from your credit report.
How Long Does A Collection Stay On Your Credit Report?
Collection accounts can remain on your credit report for around seven years after the date that the lender initially put your debt out for collections.