For Each Collection Deletion on Your Credit Report How Much Will Your Score Rise?

Credit reports and the scores based on them serve a crucial role in your ability to get new forms of credit. Whenever you have debt collection appear on your credit report, this lowers your credit score and makes it harder to get a new loan. However, removing the record of the collections action will usually raise your score.

Credit Scores

Different companies create and use credit scores. These scores give lenders and borrowers a numerical representation of how reliable a potential borrower has been with past forms of credit. These scores are based on your credit report, a collection of your prior credit transactions over the past seven to 10 years. While you have the right to view your credit report every year without charge, you do not have the same right to view your credit score for free as these numbers are proprietary information created by different companies.

Negative Impact

The exact impact of a collections action, and any subsequent deletion, on your credit score is difficult to determine. At a minimum, it's reasonable to assume that removing a recent collections action will likely have at least as much impact as removing a 30-day late payment, as collectors typically do not get involved with a bill until well after payment delinquency. Yahoo Finance reports that a single 30-day late payment can lower your score from between 60 to 110 points.

Score Differences

The impact deleting a collections action from your credit report has on your score also depends upon what your original credit score was. For example, if you settle one of your debts with your creditors and have a credit score of 780, the settlement lowers your score by between 105 to 125 points. On the other hand, a person who receives the same debt settlement, but who has a credit score of 680 has their score lowered by between 45 and 65 points.

Time Differences

Creditors and credit scoring companies give greater weight to more recent credit transactions than they do to those that happened several or more years ago. If we assume that a credit collection lowers your score from between 100 and 120 points, new collections are more likely to have a higher impact, lowering your score by 120 points, for example, than old collections. Similarly, removing an old collections action will have less of an impact than removing a new record.