Before you pay a collection account

Two clocks that are easy to mix up

The statute of limitations is how long a creditor or collector can sue you over a debt. State law sets it, and it depends on your state and the type of debt.

The credit reporting period is how long the account can appear on your credit report. Under FCRA Section 605(c), most collections and charge-offs can be reported for 7 years, counted from 180 days after you first fell behind. That starting point is the date of first delinquency.

• Paying a collection does not restart the 7-year reporting clock.
• Reporting a newer date of first delinquency to make an account look newer is called re-aging. It is an error you can dispute.
• In some states, a partial payment or a written promise to pay can restart the statute of limitations. Check your state's rules before you pay anything on a very old debt.

Ask the collector to validate the debt

A collector must send you a validation notice that shows the amount, the creditor, and how to dispute. You generally have about 30 days after you receive it to dispute in writing. If you do, the collector must pause collection until it mails you verification.

Asking for validation is a good first step even if you think you owe the debt. It helps you confirm the amount and who owns the account now.

Very old debts

When the statute of limitations has run out, the debt is called time-barred. Under federal rules, a collector cannot sue you or threaten to sue you over a time-barred debt. The debt may still exist, and a collector may still ask you to pay it.

How a paid collection can affect scores

• Newer scoring models, such as FICO Score 9 and 10 and VantageScore 3.0 and 4.0, ignore collections that are paid.
• Many lenders, including many mortgage lenders, still use older score versions. In those, a paid collection can still count against you.
• Since 2022 and 2023, the three nationwide bureaus no longer report paid medical collections, medical collections less than a year old, or medical collections under $500.

If you decide to negotiate

• Get any agreement in writing before you pay. It should include the amount, the due dates, and how the account will be reported afterward.
• You can ask the collector to request deletion after you pay (often called pay-for-delete). Collectors and creditors do not have to agree.
• Pay in a way you control, such as a money order or a one-time payment you start yourself. Never give a collector ongoing access to your bank account.
• Keep copies of the agreement and proof of every payment.

Letters that can help

• Ask a collector to validate a debt
• Make a settlement or payment offer and ask for the agreement in writing
• Ask for a goodwill update after you pay