The Fair Credit Reporting Act sets legal guidelines for how long a collection account can remain on your credit report. After the reporting period has expired, the collection account will be removed from your credit file by the credit bureau that is reporting the debt.
Time Frame
A collection account can only remain on a credit report for seven years from the date the debt first went 180 days delinquent. After this time period, the original creditor's account and any subsequent collection accounts that have resulted from the debt going unpaid must be removed.
Benefits
The removal of a collection account will improve your credit score. A higher credit score will help you to get lower interest rates on loans and lines of credit in the future.
Misconceptions
Contrary to popular belief, paying a collection account does not result it in being removed from your credit report unless you negotiate an agreement in writing with the collection agency to remove the negative notation once the debt is paid in full.
Considerations
The Fair Credit Reporting Act gives you the right to dispute any information on your credit report that you suspect may be inaccurate with the credit bureaus. The credit bureaus then have 30 days to attempt to validate the information. If it cannot be validated, it will be removed from your credit history.
Warning
Some collection agencies have been known to intentionally report incorrect dates on collection accounts in an effort to have their notations appear within consumers' credit files for longer periods of time.
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