I recently received a letter from a collection agency that is
trying to collect on a bill of about $9 from five years ago. Will
this affect my credit score, which is currently fine? Is there a
statute of limitations for collecting on old debts?
Will It Sink Your Credit Score?
Having a bill go to collection can have a big impact on your
credit score -- especially if you have a high score now. But FICO,
the company that developed the commonly used FICO score, changed
its calculations in 2009 to disregard collection accounts and other
dings on a person's credit file when the original balance owed is
less than $100.
Not all lenders use the new version of the FICO score -- some
(including many mortgage lenders) use the older version, which
counts unpaid debts of all amounts. In that case, the bill in
collection could hurt your score.
There are several kinds of credit scores with slightly different
calculations, but they're all based on information from your credit
reports from the three major credit bureaus (Equifax, Experian and
TransUnion). It's important to monitor the reports to see if any
negative information, such as a collection account, turns up. See
Conflicting Credit Scores
Understanding Credit Scores
for more information about the different kinds of credit
Collectors can try to get the money indefinitely, but if a
collection account appears on any of your credit reports, the
credit bureau must drop it from the report after seven years from
the date of the original default, says John Ulzheimer, president of
consumer education at SmartCredit.com. It's possible that the
unpaid bill has not been reported to any of the bureaus. Paying the
collection agency won't start the clock ticking again, but it may
put the debt on a report, where it will remain until the time limit
expires in two years, says Ulzheimer.
He recommends that you check all three of your credit reports to
see if the debt is now being reported as an unpaid collection (you
can check each report free every 12 months at
, and ask the collector whether or not it will report the
collection account when it is paid. "Get any commitment to not
report it in writing or via voice recording," he says.
For more information about credit scores, see
6 Things to Know About Credit Scores