Can a Debt Collector Put the Same Account on Your Credit Report More Than Once?
An unpaid debt can follow you around for many years. Once a debt is delinquent for 150 days or more, the original creditor may decide to charge-off, or write off, that debt as a loss. It may then hire a collection agency to obtain payment from you. If you have outstanding debt, it's wise to understand if a collection agency can place that account on your credit report more than once.
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Federal Law
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The Fair Credit Reporting Act specifies who can access your credit information and under what circumstances. The law gives a collection agency the right to view your credit file for the purpose of collecting a debt. This is called permissible purpose. The law also allows the agency to place a collection account on your credit report. The collection account will remain on your report for up to seven years. Payment of the collection debt will not remove it from the report.
Significance
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A collection agency can only place the debt on your credit report once; however, the debt itself can appear on your report more than once. The debt from the original creditor will appear on your report and can remain there for up to seven years. If the creditor hires a collection agency to collect on it, both the account from the original creditor and the account from the collection agency will appear on the report until the statute of limitations for that debt expires, according to Experian.
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Considerations
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If the original creditor sells the debt to the collection agency, the original creditor no longer owns the debt. This means that the original creditor's account will continue to appear on your report but will reflect a zero balance. The collection account will still show the outstanding amount owed. If the creditor only hires the collection agency as opposed to selling the debt, the original creditor is still the owner of that debt and both the account from the original creditor and the account from the collection agency will continue to show a balance.
Warning
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A collection agency can only place a debt on your report once. If the original creditor later sells that debt to another collection agency, that new agency can place a collection account on your report as well for that debt. If a collection agency owns the debt and decides to sell it to another collection agency, that agency can also place a collection account on your report as long as the debt is still within the statute of limitations under the FCRA. According to Experian, the status of the previous collection accounts will read as "sold or transferred" and the new collection account now represents the active debt.
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References
- myFICO: What Are The Different Categories of Late Payments and How Does Your FICO Score Consider Late Payments?
- Equifax: Length of Credit History
- Equifax: Who Can See My Equifax Credit Report
- Experian: Why An Original Account and Collection Account Both Appear On Your Credit Report For The Same Debt; January 2006
- Bills.com; Charge Off and Credit Rating Fix; January 2011
