Does transferring a debt to another collection agency exend the time it appears on credit report?

Answer 1

Transferring a debt to another collection agency does not extend the time it appears on your credit report. The time a debt stays on your credit report is determined by the date of the original delinquency, and this date doesn't change when a debt is sold or transferred to a different collection agency.

Here's a clearer picture:

Seven-Year Rule: Generally, a debt can stay on your credit report for up to seven years from the date of the first missed payment that led to the account's delinquency. This is a guideline set by the Fair Credit Reporting Act (FCRA).

Date of Original Delinquency: This is the date from which the seven-year period is calculated. Even if the debt is sold or transferred to another collection agency, this original delinquency date remains the same and doesn't reset.

Collection Accounts: If a debt goes into collections, the seven-year period applies to the collection account as well. The collection account will fall off your credit report seven years from the date of your first missed payment on the original account.

Multiple Collection Agencies: If the debt is passed between multiple collection agencies, it might appear multiple times on your credit report. However, it should still be removed seven years from the original delinquency date, regardless of how many times it's been sold.

Credit Report Accuracy: It's important to regularly review your credit reports for accuracy. If a debt is re-aged (incorrectly updating the date of delinquency) or if a collection account stays on your report longer than seven years, you have the right to dispute it with the credit bureaus.

Remember, while transferring the debt doesn’t extend the time it stays on your credit report, it can restart the statute of limitations for how long the debt is legally enforceable, which varies by state. This is a different timeframe that determines how long a creditor or collector can take legal action to collect the debt. It's important to distinguish between the two.

If you’re interested in more information on managing debt and understanding credit reports, my video

“7 Proven Strategies to Eliminate Financial Anxiety” might be helpful.

It covers strategies for tackling debt and improving your financial situation, which can have a positive impact on your credit health.

Answer 2

No! You need to be careful if considering paying the collection agency. At that point it will start the 7 years entry. Bad credit remains on a credit report 7 years from the last date of activity, in other words, the date you make a payment. Make sure you negotiate a deletion prior to paying any collection account. Source: Credit Bible by Phil Turner.