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If you have a collection on your credit report, you may be wondering how it may impact your FICO Scores. Below we share answers to the most commonly asked questions about collections.


1. What is a collection? If you become significantly delinquent on a credit obligation such as a credit card or medical debt, the lender or company owed will often consider it a loss and sell it to a collection agency who will then try to collect on the money owed. The account will be marked on your credit report with a "collection" status.


2. What is a third-party collection? Third-party collections are collection efforts made by a collection agency, outside of the original crediting company. First-party or internal collections is when the lender or company uses its employees to collect unpaid accounts.


3. Will paying off the balances owed on my third-party collections increase my FICOยฎ Scores? With FICO Score 8 and older versions, paying off a collection would not have a positive impact on the score. With FICO Score 9 and FICO Score 10, paid third-party collections are not considered negative by the score.


4. Does the balance reported on a collection impact your credit utilization calculations within the FICOยฎ Score? Balances on third-party collections do not impact credit utilization characteristics within a FICO Score. Balances reported on first-party collections may be considered in credit utilization characteristics.


5. How long does a collection stay on a credit report? Third party collection accounts stay on the credit report for seven years from the original delinquency date of the original debt or the date of the first missed payment, after which the account was no longer brought current.

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