If you have failed to pay off a credit card bill, it will appear in your credit reports. This generally happens in cases where the original company writes off the debt and categorizes it under losses. They are then sold to a debt collection agency. This process is called a “charge off.” Generally, it happens when the borrower fails to clear the debt even after 90 to 180 days past the due date.
If the collection is reflected in your credit reports, it will significantly impact your credit score. Hence, it is important to learn about handling your credit report efficiently.
But how long does a collection stay on a credit report? This article will answer that question in regards to your credit score and getting collections removed.
Read more about maintaining a good credit score below.
How Long Do Collections Stay On Your Credit Report?
So, how long does a collection stay on your credit report in Canada?
Generally, the collection remains on an individual's credit report for up to seven years. Note that this is in addition to the 180 days it will remain on your credit report from the due date of the credit. Once the creditor considers the debt as delinquent, it is sold to one of the collection agencies and is reflected in the credit report as a collection account.
How To Remove The Collection Account From The Credit Report?
Before getting into the nitty-gritty of removing a collection account from your credit report, you need to consider that the process is not that easy. Hence, before proceeding with the action plan, it is best to make up your mind and maintain realistic expectations.
Even if you pay off the debt, it doesn't mean the collection account will automatically disappear from your credit report. To ensure the removal of the item from your account, you will have to deal with the debt collection agency and negotiate the terms for removal.
You may need the help of a credit repair firm if there are several inaccurate debt accounts featured on your credit report. These professionals know the best ways to deal with such situations and can guide you through them.
If you are looking forward to clearing the account from your credit profile on your own, follow the steps listed below.
Step 1: Credit Report Review
Prior to starting the process, obtain a copy of the credit report from the concerned department. There are chances that the info available to you may differ from what is available to the agencies.
Before challenging the unsubstantiated collection accounts, it is crucial to create a dispute with the bureau. Note that you are entitled to a free copy of your credit report every year.
Make sure to review every item on the credit report carefully. Check the lenders listed on the report, account information, and other items. Additionally, check the due date of your debt mentioned in the report. Proceed to the next step once you have gathered all this information.
Step 2: Explore The Removal Options
The next step is to review the removal options. You have two options for removing the collection account from your credit report – deletion of goodwill and challenging items that are inaccurate.
Challenging Inaccurate Items
Credit bureaus can't report incomplete or inaccurate information. When reviewing the information on your credit report, make sure everything listed on it is complete, and more importantly, accurate.
In case of inaccuracy or discrepancy, you can challenge that item's accuracy. After proper investigation, the credit bureaus confirm the challenges within 30 to 45 days of receiving the request.
You aren't liable for paying the debt or collection featured on your credit report that doesn't belong to you. Ask for the removal of the item from the credit report by writing a dispute letter to the bureau.
If the debt remains on the credit report after seven years, ask for its removal from the collector. Alternatively, the debt can be challenged. However, you will need authentic proof to argue your case.
Goodwill Deletion
Individuals with good credit history can ask the collection agency or the original creditor to delete the collection account. Such an act of favour is termed goodwill. However, in this case, the individual is required to clear the outstanding balance of their collection account before placing the request.
You can take advantage of your credit history and request the financial institution to consider goodwill deletion. It is neither against the rules nor does it affect the position of the creditor or debt collection agency.
Step 3: Be Patient And Wait For The Credit Score To Improve
Removal of collection accounts from your credit report isn't a quick fix. You need to be patient – if the above-listed methods don't work, you may have to wait seven years for the collection accounts to get deleted automatically from your credit report. And once the collection account is removed, your credit score improves automatically.
Credit Conclusion
Now you have all the information to answer your question: how long does a collection stay on a credit report?
It's not easy for lenders and collection agencies to remove the collection account from the credit reports even if you have paid off the balance. But there is no harm in requesting the concerned department for the same.
Always challenge or file a dispute against the inaccurate collection account. Plus, don't hesitate to seek expert advice to deal with the situation. Most importantly, check your credit score and credit report from time to time to stay updated on the facts. Try to clear your debts on or before the due date to save yourself from the hassle altogether.
