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Aron Govil: How Does a Collection Agency Affect My FICO Score?

Many consumers are not aware of the impact collections can have on their FICO scores. Accordingly, roughly 35% of all outstanding debt in the U.S is currently reported by collection agencies explains Aron Govil. The total amount that was delinquent at the time these accounts were sent to a collection agency rose 4% in 2009 alone according to data compiled by Equifax. This is because lenders are reporting an increasing number of delinquencies due to the economic recession.

Here is how a Collection Agency affects My FICO Score:

  • A consumer’s FICO score can drop anywhere between 65-110 points when one or more collection account appears on their report. Collection accounts tend to remain on a consumer’s credit report for seven years from the original delinquency date.
  • The impact of a collection account on a FICO score is not consistent across all three credit bureaus. While Equifax and Trans Union use collections to calculate 30% of a consumer’s FICO score, Experian uses only 10%. Since each bureau calculates their own version of the FICO credit score, it will vary from agency to agency as well as person to person depending on what information they have in their files.
  • Accordingly, even if a collection does not appear on one of your credit reports it can still have an effect on your overall FICO score by lowering the average age of accounts you have open or by increasing the amount you owe compared to the amount of credit you currently have available to use.
  • If you are unsure about the impact a collection account has on your FICO score or other aspects of your current financial situation. It is advisable to consult with a debt relief professional who can help provide insight into how best to approach this problem.
  • Even though not all collection agencies report consumer’s information to credit bureaus. They will still adversely affect your score if they are reported elsewhere in your personal files says Aron Govil. By understanding what information these companies report through the Fair Credit Reporting Act (FCRA). Consumers may be able to better assess their options when dealing with these types of debts.
  • The FCRA was created for “the purpose of protect consumers…to insure that consumer reporting agencies exercise their grave responsibilities with fairness. Impartiality and a respect for the consumer’s right to privacy.”
  • It is important to understand which types of collection agencies are governed under this act. As stated above not all collection agencies fall under its jurisdiction. Collection agencies that should report your account information to the credit bureaus include. Those who “regularly attempt to collect debts owed or due…or asserted to be owed or due another”. This would include banks, other lenders and telecommunications companies who seek payment on delinquent accounts.
  • The act also states that it only covers individual reports pertaining to no more than one person. But still holds collection agencies accountable if they sell an outstanding debt. For less than the value of what you owe (known as portfolio sales). When selling off these types of accounts debt collectors must provide the credit bureau. With a description of your debt and why it is valid. This additional information allows the agency to maintain its commitment under the FCRA. By ensuring that they do not sell off debts that are uncollectible or inaccurate.
  • When dealing with collection agencies it is important to understand both your rights as well as. Be aware of what these companies can do when attempting to collect on delinquent obligations explains Aron Govil. Some consumers may find themselves overwhelmed by mounting bills and only seek the services of a professional. After they have already incurred significant damage to their credit score. It is advisable for consumers to contact a debt relief professional early on in order to determine. If any viable options exist before incurring more debt than necessary.
  • If you wish to contact a professional regarding your current financial situation. Free debt advice is available to anyone who requests it through various online sources including
  • If you are unsure about how best to approach your debt. Which companies may be making incorrect claims against you. Take the time to sit down with a debt relief professional for free credit advice. By allowing yourself to better understand what options are available to help address your current debts. You may be able to avoid incurring more debt than necessary and improve your FICO score in the process.


First off, let me start by saying that I do not work for or have any financial affiliations with As a matter of fact, this website was only discovered within the past month says Aron Govil. However, I have to say that it is pretty much on point. With what it reveals about credit scores and debt relief services.