Can you have a 700 credit score with collections (2024)

It is possible to have a 700 credit score when a default payment goes to collections. That being said, it’s not likely your credit score will stay at 700 once this happens. Credit scores tend to drop once there’s a report of collections.

If you have ever been on the receiving end of calls from a debt collector, you will know well the anxiety that comes with an account in collections. According to the Urban Institute, about 64 million Americans had a debt collection account as recently as August 2022.1

No one wants a credit account to be passed off to a collection agency, but it happens often to those experiencing financial difficulties that make it challenging to cover their monthly payments on time.

When a borrower defaults on a loan or stops making their credit card payments, lenders and credit card issuers will sell the debt to a collection agency, so they don’t have to deal with the hassle of getting payment. This is not only done for loans and credit card balances but also for landlords, utility companies, and medical service providers.

If you are looking to improve your credit score after a collection account, you may be wondering “can you have a 700 credit score with collections?” A good place to start is to gain a clearer understanding of the credit scoring system, and frequently check your credit reports. From there, you can better know how collection accounts impact your credit and what you can do to obtain a good credit score.

What Information Is on Credit Reports?

Your credit report is of enormous importance in many different areas of your life. Credit reports are not only relied upon by mortgage lenders and credit card companies but can also be instrumental in apartment applications, insurance coverage, and even employment opportunities.

The information on your file is compiled by three major credit reporting agencies – TransUnion, Experian, and Equifax. All details and facts are either reported to or gathered by the credit bureau to portray an overall view of your creditworthiness as a borrower. Each credit bureau generally divides the information into the categories of personally-identifying details, credit accounts, credit inquiries, public records, and collection debts.

Personal details like your full name, date of birth, Social Security number, current and previous addresses, and employment information are included in your credit report to connect you to it. Next, your report will have details on all your credit accounts, including the type of account (i.e., personal loan, credit card, quick cash loans, mortgage loan), the date the account was opened, the loan amount or credit limit, available credit, and payment history.

Whenever you authorize a credit check, a new hard inquiry will appear in the credit inquiries section of your credit report. Soft inquiries from pre-approval and checking your own credit are included there as well, but they do not impact your credit score. And finally, public records like bankruptcy and foreclosures, as well as collection accounts will show up as derogatory marks on your credit report.

How Credit Scores Are Calculated

The information on credit reports is then used to calculate three-digit credit scores to give a more broad view of an individual’s creditworthiness at a glance. There are many different credit scoring models, but the most widely used is undoubtedly the model created by the Fair Isaac Corporation.

FICO scores are calculated by dividing up an individual’s credit report into five parts, each part with a different percentage in the calculation. The calculation of the FICO scoring model is as follows:

Credit Score FactorPercentage of Overall ScoreDescription
Payment History35%Your history of on-time and late payments. On-time payments boost your score, while late or missed payments harm it.
Amounts Owed30%The total amount of debt you owe across all your credit accounts. High debt, especially with high credit utilization ratio, can lower your score. It’s recommended to keep your credit utilization rate at 30% or lower.
Length of Credit History15%The average age of your credit accounts, including your oldest and newest accounts. A longer credit history generally improves your score.
New Credit10%The number of recently opened credit accounts and hard inquiries. Too many new accounts or hard inquiries can lower your score. Soft inquiries, like pre-approval and checking your own credit, don’t affect your score.
Credit Mix10%The variety of types of credit accounts you have. A mix of different types of credit, rather than many accounts of the same type, can improve your score.

Credit Score Classifications

The classification of credit scores according to the Fair Isaac Corporation are as follows:

300-579 → POOR

A credit score between 300 and 579 points is considered poor credit. It is incredibly challenging to get approved for new credit at all when you have a poor credit rating in this range. And those lending products that are available, like loans for people with poor credit, tend to have extremely high-interest rates making them difficult to afford.

580-669 → FAIR

A credit score between 580 and 669 points is considered fair credit. With a fair credit score, you might be able to access a few more opportunities, but you will still likely be charged higher interest rates than your peers with a good credit score.

670-739 → GOOD

A credit score between 670 and 739 points is considered good credit. Having a good credit score means you are more likely to receive pre-approval offers from lenders, banks, and credit card companies. You will likely be able to get approval for credit products with market-equivalent rates.

740-799 → VERY GOOD

A credit score between 740 and 799 points is considered very good credit. A credit score within this range will give you access to far more competitive interest rates. A very good credit score can get you better offers and make denial less likely.

800-850 → EXCELLENT

A credit score between 800 and 850 points is considered excellent credit. There is a wealth of opportunities open to you with an excellent credit score. You are the borrower that companies want to work with. Because of this, you will have access to the most competitive interest rates and best deals available.

Is a 700 Credit Score Possible With Collection Accounts?

It is theoretically possible to get a 700 credit score with a collection account on your credit report. However, it is not common with traditional scoring models. A derogatory mark like a collection account on your credit report can make it incredibly difficult to obtain a good credit score like 700 or over.

How Long Do Collections Remain on Your Credit Report?

Collection accounts are almost always reported to the credit bureaus and, according to the Fair Credit Reporting Act (FCRA), can remain on an individual’s credit report for up to seven years from the date of the original debt’s first delinquency.

Can Paying off Collections Improve Your Score?

Newer credit scoring models do not include collection accounts that have a zero balance, meaning that when you pay off your balance, you should see your credit score increase. That being said, older models still factor in collection accounts even if they have been paid off. Some lenders still use the older scoring models, especially mortgage lenders, so it is important to be aware either could be used.

Improving Your Credit Score After Collections

If you have recently had a collection account on your credit report, there are plenty of things you can do to improve your credit score. A 700 credit score may not be too difficult to reach if you have paid off your collection account and you are using one of the newer credit scoring models. However, if you want to play a more active role in boosting your credit score, there are several strategies you can employ to get the results you want to see.

Here are a few of the most important things to keep in mind when rebuilding your credit after a collection account:

Prevent a New Collection Account

To ensure that your credit recovers quickly, do whatever you can to prevent any new collections from being created for debts you have. This will mean that you need to be very careful not to have any late payments in your payment history. Late payments have the potential to harm your credit, but not handling the required payments can also lead the lender or credit card issuer to sell the remaining balance to debt collectors. A secondary collection account will not only stall your efforts to improve your score but also lead to bad credit that is even harder to fix.

Handle all your minimum payments for your credit cards and monthly installments on your loans by the due date or earlier to make a positive impact on your credit. If you have a habit of forgetting to make your payments, we recommend setting up automatic payments so that you won’t ever miss a due date again. You will thank yourself for making the change when you see the difference in your credit score.

Lower Your Credit Utilization

One of the most reliable ways to give your credit score a major boost is to lower your credit utilization ratio. If you are approaching your credit limit on all your credit cards, you likely do not have much available credit and a very high utilization ratio. Paying down the balance of your credit cards until you have 70% of your total credit limit available will significantly improve your credit score.

By doing this, you will make your minimum payments more affordable and decrease the financial stress your credit card debt causes in your life. As a general rule for responsible credit usage, always keep your credit utilization rate at 30% or below. Additionally, you want a reasonable debt-to-income ratio to keep your finances as low-stress as possible.

Stop Applying for New Credit

After you’ve paid collections, take a break from applying for any new credit, including credit cards, personal loans, cash advance loans, or bad credit loans. All applications for new credit, whether that’s for credit cards or loans, will create a new hard inquiry on your report. Too many hard inquiries within a short period of time can result in bad credit, so it’s a good idea to take some time off so that your credit has time to recover.

It may take some time to see the results of your efforts, as credit scores don’t jump a hundred points overnight. Patience is crucial to building credit after a derogatory mark like collections. The time and effort you put into it are well worth it because of the financial opportunities that will be available to you with good credit.

Credit Scores When You Have a Collections Account: FAQ

How do collections affect my credit reports?

Collection accounts can have a significant negative impact on your credit reports and credit score. This is because payment history is the most heavily weighted factor in calculating your credit score. Just one missed payment can affect your credit report for up to seven years. A collection account shows that you’ve had difficulty repaying your debts, which can lead to lower credit scores.

Can I still achieve a higher credit score if I have collections on my report?

Yes, it’s possible to achieve a higher credit score even with collections on your report, but it’s more challenging. The impact of collections on your credit score diminishes over time, especially if you maintain good credit habits like making payments on time and keeping your credit utilization low.

How can I check if I have collections on my credit report?

You can check your credit report for free once a year from each of the three major credit bureaus through This report will show you any collections along with other details about your credit history.

What can I do if the information about collections on my credit report is incorrect?

If you find incorrect information about collections on your credit report, you can dispute it with the credit bureau that provided the report. They are required by law to investigate your dispute. If the collection agency can’t verify the debt, it must be removed from your report.

What is a debt collector?

A debt collector is an entity that collects overdue debts from borrowers. This could be a third-party agency hired by the original creditor, or it could be a company that has bought the debt from the original creditor. The job of a debt collector is to recover as much of the unpaid debt as possible.

Who are the three major credit bureaus?

The three major credit bureaus are TransUnion, Experian, and Equifax. These agencies collect and maintain information about your borrowing and payment history to create your credit report and calculate your credit score.

What role do collection agencies play in my credit score?

Collection agencies report unpaid debts to the three major credit bureaus. Having a debt in collections can significantly lower your credit scores because it indicates that you’ve had trouble paying back what you owe.

Remember, maintaining a good credit score is an ongoing process. It’s important to regularly check your credit report, make payments on time, and keep your credit utilization low. If you have collections on your report, consider seeking advice from a credit counselor or financial advisor to help improve your credit health.

A Note From CreditNinja

If you’re currently going through a financial emergency, but don’t know how to get money when you already have a debt collection account, know you have some options available to you. Consider reorganizing your budget to free up some extra cash, asking a friend or family member for a small loan, or dipping into your savings account. But if a loan is ultimately the right choice for you, be sure to research all your options, like CreditNinja.

At CreditNinja, we pride ourselves in providing personal installment loans with an easy application, quick funding,* and a flexible repayment schedule. Fill out the online app in just a few minutes to find out how much cash you could get today!*


  1. The Number of Americans with Debt in Collections Fell during the Pandemic to 64 Million | Urban Institute
  2. Can You Have a 700 Credit Score With Collections? | Sensible Dollar
  3. Can Paying off Collections Raise Your Credit Score? | Experian
Can you have a 700 credit score with collections (2024)


Can you have a 700 credit score with collections? ›

It is theoretically possible to get a 700 credit score with a collection account on your credit report. However, it is not common with traditional scoring models. A derogatory mark like a collection account on your credit report can make it incredibly difficult to obtain a good credit score like 700 or over.

Can you still have a good credit score with collections? ›

If you already have debts in collection, the good news is that the impact on your credit scores will diminish over time. And eventually the debt collection will fall off your credit reports completely. Generally, an account in collection will remain on your credit reports for seven years.

Can you still build credit with collections? ›

Having debt in collections shows a history of late or missed payments and may harm credit scores. For some credit scoring models, paying off collection accounts may improve credit scores. FICO® Score 9, FICO Score 10, VantageScore® 3.0 and VantageScore 4.0 credit scoring models penalize unpaid collection accounts.

How many points does a collection take from your credit score? ›

So, how many points does a collection drop your credit score? If you have a high score of 700, you can expect the first collection to drop it over 100 points. If it's lower than 700, expect even more.

Can I get approved with collections? ›

Traditional lenders may not work with a borrower who has any collections on their credit report. But there are exceptions. A lender may ask a borrower to prove that a certain amount in collections has already been paid or prove that a repayment plan was created. Other lenders may be more flexible.

What happens if you never pay collections? ›

If you don't pay, the collection agency can sue you to try to collect the debt. If successful, the court may grant them the authority to garnish your wages or bank account or place a lien on your property. You can defend yourself in a debt collection lawsuit or file bankruptcy to stop collection actions.

Do unpaid collections go away? ›

Collections agency debt

Instead, it'll typically remain there for the standard period of seven years starting from the date it was filed. Under certain conditions, however, the collections agency can remove the report from your credit profile early.

How long to fix credit after collections? ›

All other negative marks fall off after seven years. If a single account has a series of negative marks (such as multiple late payments and then a collections account) and you never brought the account current, the seven-year timeline starts with the date of the first late payment.

Is it better to pay off collections or wait? ›

According to most credit scoring models, paying off a collection account doesn't stop it from having an effect on your credit. You'll usually have to wait until they reach the end of their seven-year reporting window. The good news is that the older the information is, the less impact it should have on your credit.

Should I pay collections or wait 7 years? ›

Time-barred debt can damage your credit score if it's still listed on your credit report as past due and you choose not to make a payment. Even if your debt meets the statute of limitation requirements in your state, the credit reporting agencies won't remove the negative item for seven years.

How badly do collections hurt credit? ›

A collection on a debt of less than $100 shouldn't affect your score at all, but anything over $100 could cause a big drop. In many cases, it doesn't even matter how much it is if it's over $100. Whether you owe $500 or $150,000, you may see a credit score drop of 100 points or more, depending on where you started.

Is it true that after 7 years your credit is clear? ›

Highlights: Most negative information generally stays on credit reports for 7 years. Bankruptcy stays on your Equifax credit report for 7 to 10 years, depending on the bankruptcy type. Closed accounts paid as agreed stay on your Equifax credit report for up to 10 years.

What is the best reason to put when disputing a collection? ›

You should dispute a debt if you believe you don't owe it or the information and amount is incorrect. While you can submit your dispute at any time, sending it in writing within 30 days of receiving a validation notice, which can be your initial communication with the debt collector.

Can you buy a house with credit card debt? ›

Yes, you can qualify for a home loan and carry credit card debt at the same time. But before you start the homebuying process, you'll need to understand how credit card debt impacts your creditworthiness — this can help you decide whether it makes sense to pay down your credit card debt before buying a house.

How much will credit score increase after collection removed? ›

There's no concrete answer to this question because every credit report is unique, and it will depend on how much the collection is currently affecting your credit score. If it has reduced your credit score by 100 points, removing it will likely boost your score by 100 points.

How long do collections affect credit score? ›

While an account in collection can have a significant negative impact on your credit, it won't stay on your credit reports forever. Accounts in collection generally remain on your credit reports for seven years, plus 180 days from whenever the account first became past due.


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