Can a Collection Agency Report an Old Debt?

It's common for old debts to pass from one collection agency to another, and each agency is allowed to place a collections entry on your credit report. The entry appears on your credit report as a "collections account." A collections account is considered a negative credit entry, with some lenders, such as mortgage companies, refusing to approve a loan until a collections entry is resolved. The Fair Credit Reporting Act requires debt collectors to remove collection account entries when your account is sold or traded. Then the next debt collector can add another entry.

Credit Disputes

You're allowed by law to dispute anything on your credit report, including information posted by collection agencies. Start by obtaining your credit report for free from AnnualCreditReport.com, a site managed by the major credit bureaus---TransUnion, Equifax and Experian. It's the only site authorized by the Federal Trade Commission to offer free credit reports under the terms of the Fair Credit Reporting Act.

Investigation

Write the credit bureau at its address listed on the credit report to complain about collection agency information that you feel is inaccurate. Simply indicate in your letter that the information is wrong and should be removed. The credit bureau will contact the collections agency to investigate, and must remove the information if it is not accurate.

Adding Old Entries

Negative credit information such as collection accounts can be listed for seven years. Collection agencies adding old entries are supposed to enter the correct date of last activity on the account, such as a payment. Example: A credit card debt you defaulted on five years ago remained dormant with the original creditor after being written off. Then it was sold to a debt collector, who placed a collections account entry on your credit report. The FTC insists that the date of the new entry must match the date the account was originally charged-off by the original creditor or the date of your last payment.

Unethical Behavior

Some debt collectors purchasing old debts attempt to "re-age" the debt by recording it on your credit report as an account that was recently charged off. A debt that is re-aged in this way theoretically can remain on your credit report for another seven years---unless you challenge it. The FTC reports that it is illegal for debt collectors to arbitrarily re-age debts. However, the date can be updated if you make a payment or acknowledge the debt through communication with the new collection agency. Protect yourself by disputing inaccurate information through the credit bureau.