How Do Unpaid Debt and Collection Items Show Up on My Credit Report?

Your credit report offers a snapshot of how well you’ve handled borrowed money. If you’ve been having difficulty paying your bills, you may be concerned about your credit. You may be asking questions like “How does unpaid debt and collection items show up on my credit report?”

Unpaid Debt

Your credit report contains information about all the credit accounts you have from credit cards to student loans to your mortgage. Some accounts may report to only one of the three main credit bureaus, which are TransUnion, Equifax, and Experian, so the information on each credit report may be slightly different.

When potential lenders look at your credit report, they consider how well you’ve done paying your bills on time. They also look at your total debt and how much difficulty you might have paying your bills if you’re in over your head and owe more than you can comfortably pay.

Collection Items

If you’ve had problems such as medical issues or losing your job, you may start to fall behind on your bills. If one or more of your accounts is past due, it can be sent to a collection agency. A collection agency can choose to report to one or more credit bureaus, and they may report it as soon as they take over the debt, or they may not report it at all.

Before an account goes to a collection agency, it’s already seriously past due and has already harmed your credit. Potential lenders see derogatory marks such as past-due payments, collection accounts, bankruptcy, and foreclosure as serious red flags and signs that you have a history of not paying your debts as agreed.

What if You Pay Back a Collection Item?

Once an account has been seriously delinquent or has become a collection item, it’s likely to remain on your credit report for seven years from the date you first missed a payment. Since you know your credit has already been harmed, you may wonder if there’s any point in paying back the balance.

Paying back a collection item won’t immediately improve your score, but it’s a sign of taking responsibility for what you owe. Newer scoring models may weigh paid collection items less heavily than those you haven’t paid back.

Verifying that Collection Items are Accurate

Make sure that any collection items or past due balances on your credit report are accurate. Collection agencies sometimes sell debt to different collection agencies, but the same debt should not be listed twice. A balance you’ve already paid shouldn’t be showing as unpaid. If a negative item appears on your credit report more than seven years after the first missed payment, it should be disputed.

Any errors on your credit report that you find should be disputed immediately. The easiest way to do this is with Dovly’s help. Dovly is an AI credit engine that can help you track, manage and fix your credit. We will work with credit bureaus for you to correct misinformation on your credit report. Try it risk-free with our free membership tier.