Collection account errors can cause serious problems with your credit, especially when you do not recognize a debt or believe it is being reported incorrectly. An inaccurate collection account can damage your credit and make it harder to qualify for a mortgage, car loan, apartment, or other credit.
Collection account errors are more common than many people realize. A debt may not belong to you, the balance may be wrong, a paid collection may still be reported as unpaid, or the same debt may appear more than once.
If a collection account on your credit report is inaccurate, you have the right to dispute it and have the information properly investigated.
How Does a Collection Account End Up on Your Credit Report?
When an account goes unpaid, the original creditor may send the debt to a collection agency or sell it to a debt buyer. The collection company may then begin reporting the account to one or more of the major credit bureaus.
Collection accounts can also change hands several times. Each time information moves from one company to another, there is another opportunity for mistakes to occur.
That does not mean every collection account is wrong. But if you see a collection you do not recognize—or information about a collection that does not look accurate—you should investigate it rather than assume the credit report is correct.
Common Collection Account Errors
Collection accounts can be reported incorrectly in many different ways. Some of the most common problems include:
- A collection account that does not belong to you. The debt may belong to someone with a similar name, result from a mixed credit file, or have been created through identity theft.
- The wrong balance. Payments, settlements, insurance payments, or other credits may not have been properly reflected.
- A paid collection still reported as unpaid. If you paid or settled a collection account, your credit report should accurately reflect its current status.
- The same debt reported more than once. A debt may be transferred or sold to another collection company while the previous collection account continues to appear on your credit report.
- Incorrect dates. A collection account may contain inaccurate dates that make the debt appear newer than it actually is.
- A discharged debt still reported as owed. If a debt was discharged in bankruptcy, it should not continue to be reported as an outstanding balance that you still owe.
Any one of these errors can make your credit history look worse than it really is.
When the Collection Account Isn’t Yours
One of the most serious collection account errors is also one of the simplest: the debt belongs to someone else.
Sometimes a collection appears because a credit bureau has confused your information with another person’s. This is known as a mixed file and can happen when people have similar names, Social Security numbers, or other identifying information.
In other cases, the original account was opened by someone using your identity. A collection account may actually be the first sign that you have been a victim of identity theft.
If you do not recognize a collection account, do not automatically assume you forgot about an old bill. Look at the name of the original creditor, the balance, the dates, and any other information shown on your credit report. The account may not belong to you at all.
Why the Same Debt May Appear Twice
Sometimes the same debt appears on a credit report more than once. This can happen when a debt is transferred or sold to a new collection company, but the previous collection account continues to be reported.
Duplicate collections can be confusing because the entries may not look exactly the same. They may list different collection companies, slightly different balances, or different account numbers even though they relate to the same original debt.
If you believe the same debt is being reported twice, compare the original creditor, account information, balances, and dates. One debt should not be made to look like two separate unpaid collection accounts.
Paid Collections That Are Still Reported as Unpaid
Paying or settling a collection account does not necessarily mean the account will immediately disappear from your credit report. However, the information being reported should accurately reflect what happened.
If you paid the collection in full, it should not continue to show an outstanding balance. If you settled the account, the balance and status should be updated to accurately reflect the settlement.
Problems can occur when payments are not properly communicated between collection companies or when a debt changes hands. The result may be a collection account that continues to show money owed even though you already paid or resolved the debt.
When an Old Collection Account Gets a New Date
Collection accounts generally cannot remain on your credit report forever. The reporting period is tied to when the original account first became delinquent and was never brought current again.
Selling or transferring a debt to a new collection company does not restart that clock.
Sometimes, however, an old collection appears with a newer date that makes the debt look more recent than it really is. This is often referred to as re-aging. An incorrect delinquency date can cause negative information to remain on your credit report longer than it should.
If an old collection suddenly appears to be much newer, or remains on your credit report longer than expected, the dates being reported may be worth a closer look.
Collection Accounts After Bankruptcy
If a collection account was included in a bankruptcy and the debt was discharged, it should not continue to be reported as a balance that you still owe.
Problems sometimes occur when a collection agency fails to update its reporting after the bankruptcy or when a debt has been transferred between different companies. The result can be a credit report that makes it appear you still owe a debt that was legally discharged.
If this happens, the collection account may need to be disputed and corrected. You can learn more about these types of problems on our Errors After Bankruptcy page.
Can You Remove an Incorrect Collection Account?
If a collection account is inaccurate, you have the right to dispute the information with the credit bureaus. Depending on the error, the account may need to be corrected, updated, or removed from your credit report.
The important distinction is whether the collection account is actually inaccurate. A legitimate collection account generally cannot be removed simply because it hurts your credit score. But if the debt is not yours, the balance is wrong, the account is duplicated, the dates are inaccurate, or the information is otherwise being reported incorrectly, you have the right to challenge it.
Keep copies of your credit reports, disputes, supporting documents, and the responses you receive. If the inaccurate information remains after you have disputed it, you may have additional rights under the Fair Credit Reporting Act.
What If the Credit Bureau Doesn’t Fix the Error?
Many consumers assume that once they dispute an inaccurate collection account, the problem will be corrected. Unfortunately, that does not always happen.
Sometimes a credit bureau will respond that the information has been “verified” even though the underlying error was never actually resolved. In other cases, an account may be corrected temporarily and then appear incorrectly again.
If you have disputed inaccurate information and the collection account remains on your credit report, keep copies of everything you sent and every response you received. Depending on the circumstances, you may have additional rights under the Fair Credit Reporting Act if a credit bureau or the company reporting the account failed to properly investigate and correct inaccurate information.
When Should You Contact an Attorney?
You may want to speak with an attorney if you have already disputed an inaccurate collection account and the problem has not been corrected, especially if the error has caused you to be denied credit, pay a higher interest rate, or suffer other financial harm.
At Shmucher Law, I represent Florida consumers dealing with inaccurate information on their credit reports. I can review your credit reports and dispute history, help determine why the error remains, and explain what options may be available under the Fair Credit Reporting Act.
If an inaccurate collection account is still damaging your credit after you have tried to correct it, contact Shmucher Law to discuss your situation.