How long does it take before a collection record will be removed from your credit report after it is paid off?
This is such a common question and a common credit myth! The truth is that paying off a collection record does nothing to remove the record from your credit report. Collection records will remain on your credit report for 7 years from the last 180 day late payment that led to the account being sold to collections. This expiration date doesn’t change if the account is paid off or sold to another collector. Paying off a collection debt can have a tiny positive impact but the major improvement will only come when the record expires and it removed from your credit report.
How did this myth get started? There are two likely sources: the collection agencies and consumers. First off, this myth is likely propagated by collection agencies themselves. Debt collectors are known for saying anything (true or not) if it will get a consumer to pay off an old debt. The fact that collection records remain on your credit report even after they are paid off makes borrowers less likely to pay up and is commonly either not mentioned or erroneously disputed by collection agents.
This myth is probably also spread by consumers. It is logical to assume that paying off an old negative record would cause it to be removed from your credit report. Logical, but still not true. Because credit reports are a complete record of your finances over the last 7-10 years, there is nothing you can do to remove accurate information before the set expiration date. This is true for bankruptcy record, liens, late payments and positive records too.