I haveheard (and this could be incorrect) that dealing with old collection accounts can actually cause them to become current and hurt your present credit score. Is this correct? I have an account that is over 2 years old but still has a balance due. I realize the collection is not really effecting my score, but I know it will look better if I have it removed. If I contact this company can they restart the clock?
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They can and often do IF you do a payments plan.
Pay the whole thing off, and ask for no dates to be changed.
All you want is the account to show paid of in full.
So I would talk to them before I paid.
Thursday, September 27, 2007
after 2 years can a collection account be updated to new date of last activity and start the seven years over again?
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Actually the answer to that question is "No". The seven year credit reporting laws are Federal Laws and are not the same as the States Statutes of Limitations Laws. Federal Laws mandate that Items posted on your credit report can only remain on your credit report for 7 years whether they get paid off or not (judgements and bankruptcies are an exception). These seven years are not affected by the Date of Last Activity. They are not changed or prolonged if you make any payments on any accounts.
The seven years start counting 180 days (about 6 months) from the time you first became delinquent on the account or from the date you made the last payment on the account when it was still with the Original Creditor, before it was turned over to a collection agency.
For Example:
You open a credit card account in January of 2001 with Chase Bank, by July 2001 you stop making any payments on it. At this point you have become delinquent on the account. The 180 days would begin July 2001 because that is the last payment you made to Chase Bank. About 6 months later December 2001 the Seven Year reporting clock would officially begin. Lets say Chase Bank sells this account to a third party collector around March of 2003 (a year and 1/2 later) The fact that the collection agency didn't start collecting on the account until a year and 1/2 after you became delinquent with Chase Bank the original creditor doesn't change the Seven year credit reporting period. If you made any payments on this account to a collector that doesn't affect this.
Keep in mind that making any payments on old debt might make the debt legally collectible again by restarting the Statute of Limitations (period of time that a collector can legally go after you for a debt) That however, has nothing to do with the Seven Year credit reporting period.
Federal Laws state any account beyond the seven year credit reporting period must be deleted from your account.
This does not mean that you are no longer obligated to pay this debt. It simply means this debt cannot reappear on your credit report.
If it does reappear its against Federal Law..
If you believe any accounts on your credit reports are beyond the 7 year Federal credit reporting time, you should file a dispute immediately with the credit bureaus to have it removed. If the Collection Agency/Creditor verifies it and the Credit Bureau won't remove it then go to step two. File a Complaint with your local State Attorney General's Office and the Federal Trade Commission this will no doubt get their attention.
To read up on the Credit and Debt Collection Laws go to www.ftc.gov
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