Selling A Collection Starts the Credit Reporting Clock From Zero – This is incorrect. When a debt is sold to a debt buyer and even subsequently resold to other debt buyers the new collection cannot remain on a consumer’s credit report for longer than 7 years from the date the original account went into default. If the original account is a credit card that went into default in June of 2010 ALL collections accounts related to that credit card must be removed no later than June of 2017. There are no exceptions to this rule and nothing the consumer does (pay it, settle it, dispute it) can cause it to remain longer than 7 years.
Multiple Collections Can Show Up For The Same Original Debt – This is also incorrect. If a defaulted debt is sold multiple times to multiple debt buyers then the previous debt owner must remove it from the consumer’s credit reports. In fact, the credit industry’s reporting standards guide orders as such. Acceptable reasons for deleting collection accounts include, “Accounts which have been forwarded or sold to another entity” and “Debt Buyers must delete accounts that have been forwarded or sold to another entity.”
Paying A Collection Will Cause Your FICO Score to Improve – Not only is this incorrect but the opposite is often true. The impact collections have on your credit reports are caused by the incident rather than the balance. Paying off a collection doesn’t cause it to be removed from your credit reports. It does, however, cause the balance to be updated to zero. As long as the collection remains on the consumer’s credit report it will still likely have an influence on their credit scores.