Collection Account
Also known as: collections, charged-off collection, debt in collections
A debt that has been assigned or sold to a collection agency after the original creditor wrote it off as a loss. Collection accounts appear as negative entries on your credit report for up to 7 years from the original delinquency date. They significantly reduce credit scores.
Full definition
A collection account is created when an original creditor (like a personal loan lender) gives up on collecting the debt directly and either assigns it to an in-house collection department or sells it to a third-party collection agency. Timeline: (Day 1) Payment missed. (Day 30-180) Original creditor calls and sends notices. (Day 120-180) Account charged off internally. (Month 4-9) Debt sold to collection agency at 5-20 cents on the dollar. (Month 4 onward) Collection agency reports a new collection account to credit bureaus. Dual reporting problem: Both the original charged-off account AND the new collection account may appear on your credit report simultaneously. This creates two separate negative entries for the same debt - an issue consumer advocates have criticized as unfair. New CFPB rule: As of 2025-2026, the CFPB has finalized rules prohibiting medical debt collection accounts from appearing on credit reports. Non-medical collection accounts remain reportable for up to 7 years. Should you pay a collection account: Paying a collection account stops the clock on legal collection attempts. However, the negative entry remains on your credit report for 7 years from the original delinquency date regardless of whether you pay. Ask the collector for a 'pay-for-delete' agreement (they agree to remove the tradeline in exchange for payment). Not all collectors will agree, but some do. Newest FICO models (FICO 10T) and VantageScore 4.0 score paid collections less severely than unpaid collections. However, many lenders still use older FICO models that penalize paid and unpaid collections nearly equally.
- Written by
- Get Advance Loan Editorial Team
- Reviewed by
- Compliance Review
- Published
- January 15, 2026
- Last reviewed
- June 15, 2026
- Credit scoreA three-digit number (typically 300 to 850) summarising your credit history. Lenders use it to predict the likelihood you'll repay.
- FICO scoreFICO is the credit-scoring model used in roughly 90% of U.S. lending decisions. Scores range from 300 to 850.
- VantageScoreVantageScore is a competing credit-scoring model jointly developed by the three major credit bureaus. Also runs 300 to 850.
- Credit reportA record of your credit history maintained by the three U.S. credit bureaus. You're entitled to one free copy per year from each bureau.
- Soft credit inquiryA credit check that does not affect your credit score. Used for pre-qualification and rate-shopping.
- Hard credit inquiryA credit check that may lower your credit score a few points and remains on your credit report for up to 24 months.
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