No credit? Unpaid debts can still be sent to collections

Bounce back by paying debt, working on your building your score

Speaking of Credit columnist Barry Paperno
Barry Paperno is a freelance writer and credit scoring expert with decades of consumer credit industry experience, serving as consumer affairs manager for FICO (formerly Fair Isaac Corp.) and consumer operations manager for Experian. He writes "Speaking of Credit," a weekly reader Q&A column about credit scoring and rebuilding credit, for His writings about credit scoring have appeared in The Huffington Post, MSN Money, CBS Money Watch and other consumer finance websites.

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Dear Speaking of Credit
Can someone send you a credit collection notice even if you have no credit yet? Does it affect your credit score in the future? – Renz


Dear Renz,
Yes, you can be sent to collections over that past-due debt, even if you don’t have any credit. And if that collection agency reports the debt to a credit bureau, though you may not have credit or other unpaid debts, you will have a credit report listing only this collection. You won’t, however, have a FICO credit score just yet.

While there are many kinds of credit scores using a variety of scoring methods, we’ll keep things simple by focusing on what the FICO credit scoring formula – the one used in most lending decisions – wants to see at least these two things on your credit report before issuing a score:

  • At least one credit account – not a collection or a public record – opened more than six months ago.
  • At least one undisputed credit account (either the same as above or a different one) reported to the credit bureau within the past six months.

This, of course, doesn’t mean that a collection won’t be factored in your score once you have one. In fact, you can expect that collection to immediately send your very first credit score sinking to the lowest of scoring ranges – 500s or lower within a 300-850 range. Just how low will depend largely on:

  • The age of the collection – the older the date it was assigned to the collection agency, the better.
  • How timely you pay your credit accounts – a spotless on-time payment record will help minimize the damage from the collection.
  • Your credit utilization on any cards you may have – the lower your balance-to-limit ratio, the higher your score.

Yet your credit story does not have to be all gloom and doom. Along with the passage of time being one of your best allies, there are a few steps you can take proactively to get you to a good score sooner:

1. Get your credit report.
You can get your credit reports from each of the three major credit bureaus – Equifax, Experian and TransUnion – for free (once per year) from This will tell you whether the collection agency has reported the collection to the credit bureaus, as well as provide contact information for the collection agency. If a credit bureau can’t provide a report because you don’t have a credit file, the collection probably hasn’t been reported to that bureau.

2. Pay that debt.
If you haven’t done so already, find a way to pay the debt or dispute it if it is incorrect. Paying a debt in collection won’t remove it from your credit report once it has been reported. However, paying off the debt will prevent any further damage to your credit, such as from a civil judgment if you’re sued by the original creditor or collection agency. Ideally, you may be able to avoid having the debt reported to the credit bureau by paying it off beforehand.


Video: What is a secured card?

3. Establish good credit.
You’ve probably heard the old saying “you have to have credit to get credit.” That may have been true years ago, but it’s not true now. Even consumers with no prior – or poor – credit can qualify for a secured card that works just like an unsecured card (see video), or take out a “credit builder” personal installment loan from a bank or credit union. The positive history these accounts can contribute to your score can be just as valuable as credit history from cards and loans requiring high scores to open. 

Don’t expect miracles, but don’t give up.
Despite the likelihood of your credit history having landed on the wrong foot via an unpaid collection, it’s always good to remember that your credit score can be forgiving. Manage your credit responsibly every month. Then, as your credit report begins to reflect more of the good history and less of the bad, watch your score climb to respectability – high 600s to low 700s – within just a few short years.

See related: 10 tips for dealing with debt collectors, collection, Nuisance debt in collections under $100 may not hurt score

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Updated: 01-23-2018