If your debt is unpaid for several months you are at risk of getting your account sent to a debt collector. Once the debt collector has received your balance part of their practice is to list the account on your credit report. This hurts your credit score and will remain on your report for 7 years. Your best option is to try to have this removed so here are a few tips on how to handle this situation and remove debt collection from your credit report.
If the debt is not yours or even if the collection does belong to you try to dispute it with the credit bureaus. If the credit bureaus do not respond to you or do not provide you with a validation report within 30 days the collection needs to be removed/deleted from your report.
Dispute after 7 years
Some collection agencies can be sneaky and re-age your debt. Make sure you are tracking the age of your debt on your credit report. If you see that the collection is still on your report and it has been 7 years or longer contact the credit bureaus and dispute it to have it removed.
Pay for delete
If you tried to dispute the collection and it did not work, contact the debt collector to negotiate payment. Offer to make partial or full payment in exchange to remove the account from your report. If you have made these arrangements over the phone please make sure they send you a letter or an email so you have the agreement in writing. After payment is made and they confirm the collection removed, re-pull your credit to get confirmation. If you still see the collection on your report dispute this with the credit bureaus and make sure you attached the letter as proof.
If all else fails pay the collection
If you are not able to get the collection removed you have a few options. If you are trying to qualify for a home loan, talk to your loan officer. They might be able to help or offer additional advice. If all else fails just pay the collection. A paid collection is better than an unpaid one, it shows lenders that you are taking care of your financial responsibilities. Lastly, if you are coming up on the 7th year just wait, the collection has a time limit and will fall off your credit report.