How Many Points Will My Credit Score Drop if I Have an Account Sent to Collections?

Credit Scores
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3
 Min read
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July 22, 2021

Finances can spiral out of control for many different reasons such as losing your job, getting a divorce, going through a natural disaster or having medical problems. When you’re not able to pay your bills on time, your credit score will be affected. If you end up unable to pay one or more bills for 30 days or longer, your account will not only show as past due, but your lender may send your account to collections. Your next question may be “How many points will my credit score drop if I have an account sent to collections?”

Accounts That End Up in Collections

An account that’s seriously past due may be sold to a collections agency. If this happens, it can show as a separate account on your credit report. Accounts that end up in collections are typically unsecured accounts such as credit cards or personal loans. Things that are secured by some type of collateral such as a car loan or mortgage are handled a different way, such as repossession or foreclosure. Other types of accounts may be referred to collections agencies include medical bills and utility bills.

Whenever possible, try to work with your creditors before any of your accounts are sent to collections. You may be able to work out a payment plan that shows your willingness to pay your bills.

Collections and Your Credit Score

If you start to fall behind on payments, you’ll notice a drop in your credit score. Ending up in collections is a serious negative mark on your credit report that may cause your credit score to drop even more, possibly as much as 100 points or more.

The amount your credit score is affected can vary depending on several different factors such as how the rest of your credit report looks. This includes factors such as your credit utilization rate and how many other accounts are past due. Some credit scoring models may disregard collections accounts that have been paid in full or those that have small balances.

How Can You Remove Negative Items from Your Credit Report?

One of the hardest things about having an account end up in collections is the fact that it will remain on your credit report for seven years. If the negative item being reported is accurate, you won’t be able to have it removed until seven years have passed. You do have the right to dispute items that you believe aren’t accurate, such as accounts that don’t belong to you or outstanding balances showing on your credit report that you’ve already paid.

Dovly Can Help with the Dispute Process

If you need help disputing inaccurate items on your credit report, consider partnering with Dovly. We can help to simplify the process of having errors corrected or removed from your credit report. Dovy is an automated credit repair engine that works around the clock to make sure that what’s being reported to the credit bureaus is accurate. Get in touch with Dovly today.

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