How soon will my credit score recover from a collection item?

It won’t happen overnight, and you must keep your other card balances low

Keeping Score with Steve Bucci

Steve Bucci has been helping people decode and master personal finance issues for more than 20 years. He is the author of “Credit Management Kit For Dummies,” “Credit Repair Kit For Dummies,” “Barnes and Noble Debt Management,” co-author of “Managing Your Money All-In-One For Dummies” and “Debt Repair Kit For Dummies” (Australia). Steve is an experienced expert witness in identity theft, credit scoring and debt related cases. He has been a presenter at the FICO InterACT Global Conference, the Federal Reserve and the International Credit Symposium at Cambridge University in the UK.

Ask Steve a question, or see if your question has already been answered in the Keeping Score answer archive.

How soon will my credit score recover from a collection item? 

The negative collection account notation will stay on your file for the next seven years. However, each month that you pay your accounts as agreed, your score will improve. 

Expert Q&A

Check out all the answers from our credit card experts.

Deer Keeping Score,

I have 11 credit cards, including one account in collection that I will pay off this week. Last week I paid each card down to $10 balance, except one that is at 50 percent. My credit score is 640 now. Should I expect a credit score increase soon? -Gregory

Dear Gregory,

Slow down, cowboy – with 11 credit cards and a 640 FICO score it looks like you live life at a gallop! 

Credit follows life in many ways. Let’s say someone punched you in the nose. Do you think the pain would stop because they stopped punching? As the owner of the nose, would you forget about it as soon as it stopped? 

The answer to your question is, your credit will not break the stratosphere next month, but it may slowly rise after you show you’ve mended your ways.

Here’s how it works when it comes to credit scoring: It is far easier and far swifter to do damage to your score than it is to improve it. For instance, if you max out a card, the hammer will come down hard and fast on your score. Seems like if you pay one down substantially your credit score will improve immediately, but that is not always the case, especially if you've committed other credit score sins such as having an account in collection.

See related: How to stop collections on recurring charge reported as fraud 

Another thing I want you to know is that 640 is not a bad score. It’s not great, either – fair is the adjective FICO uses for a score in the range of 580-669. After that, 670 to 739 is “good” and scores of 740 and up are “very good" or "exceptional." Just so you know, lower than 580 is "poor," but we are not going there, are we?

Your account in collections has likely done the most damage to your score. The negative collection account notation will stay on your file for the next seven years. However, each month that you pay your accounts as agreed, your score will improve. 

Tip

Tip: There's no foolproof way to know how quickly your credit score will recover from a late payment. However, knowing what has hurt your score and how it got there can help you develop a credit rebuilding plan. 

I don’t understand why you left a $10 balance on your other cards; this won’t earn you any extra credit score points, just extra interest charges. I suggest you go ahead and pay those off completely.

As for the account that is at 50 percent utilization, your next chore will be to chip away at that as soon as you can. As I have said many times, a zero balance is my favorite number, but it’s not usually something that can happen overnight. However, you do need to make a plan for paying it down and keeping it down. 

Adding 30 points to your score will get you to the lower end of the “good” range, which is what you should strive for now. Be aware that this will likely take several months. But if you take it easy and don’t run those cards up again, you will be on the right track to “good,” and perhaps even moving toward “very good.” 

See related: What to do if your debt is sold to a collections agency

When I say the right track, I mean you should charge only the amount that you can pay off immediately or within 90 days at the most. Don’t close any accounts, unless you are being charged an annual fee that is burdensome. Long-standing accounts are good for your credit history, which does count in your score. 

My suggestion is to use your cards for those everyday purchases that you plan to make anyway. For instance, use one card for groceries and another for gas for your car. Since you have planned for those purchases, you will be able to pay the bill in full when it arrives. This will keep your cards active, but you won’t incur any interest. You may even have a card or two that offers rewards, and this is a good way to build up those points. 

You have come so far already – I know you can do this, Gregory.

Remember to keep track of your score!


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Updated: 11-19-2018