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When is a Collection Account Deleted

Dear Experian,

Is it legal for a collection agency to submit an account that they buy from a creditor as “new” even though that same account before it was purchased from the original creditor by the collection agency was two, three four years old? What can the consumer do to combat that practice in order to clear his or her credit?

– ALJ

Dear ALJ,

When a collection agency purchases an unpaid debt, the date opened on the account will reflect the date it purchased the account from the original or previous creditor because that is in fact the date a “new” collection account was opened. Both the original account and the new account with the collection company may appear on your credit report.

Open Date of Account Does Not Determine When It Will Be Deleted

However, the original delinquency date of the account must remain the same as it was with the original lender. Therefore, even though the open date of the collection account will be more recent, the account history will accurately reflect the age of the debt.

The amount of time the debt will appear in your credit history will not change. Both the original account and the new collection account will be deleted seven years from that original delinquency date.

Debts that remain unpaid with one collection agency also have the potential to be resold and bought by yet another collection company. If this happens, the new company may also report the debt. The previous collection account will be reported as closed, and the new collection account will be reported as opened on the date they purchased the debt and created a new account in their system.

As with the previous collection account, the original delinquency date must be carried over from the original account. As a result the new collection will also be deleted at the same time.

Paying A Collection Account May Help Credit Scores

While the date the debt will be deleted does not change, paying a collection account in full can have a positive impact on your credit history. Lenders may view a paid collection account more favorably than an unpaid one.

Additionally, many of the newest credit scoring models will exclude paid collections when calculating your score. As a result, paying the collection account in full could have an immediate positive impact on the score, even though the collection is still in your report.

Thanks for asking.
The “Ask Experian” team