Ask Stacy: Bad Marks Are Multiplying on My Credit Report!

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I just recently came across your website. Very nice, and you seem to know what you’re talking about. I have a question.

I am trying to fix damage that I did four years ago with four credit card amounts. Needless to say, I was shocked. My question to you is: How can a card company or any company give you a charge-off (which I understand) and then when they sell it to a collection agency, they can put the same thing on your credit report, and so on, and so on.

I have one $615 bill that was multiplied on my credit report four times for the same thing, meaning every time my debt got sold to another agency, they put it on my report, too – and they won’t take it off. And one collection agency even has the same information repeated three times. I found out that one company owns the other, which owns the other, which a parent company owns. How can this be fair?

Don’t know if you will answer me, but I hope you do because it has frustrated me for months knowing that I have four more years to contend with a bad time in my life. And I already asked all the companies to see if they would delete the entries, I have 18 bad marks and/or charge-offs for just only four original accounts.
– Shawn

Here’s your answer, Shawn!

Credit reporting agencies – notably Experian, Equifax, and TransUnion – often appear to report the same debts multiple times. The reason this happens is simple: As debts are sold by one to company to another, or sometimes even transferred from one division to another within the same company, a new account is created and reported.

While this may seem like you’re being sentenced twice for the same crime, you’re not. Or at least you shouldn’t be.

Here’s an explanation from this page of Experian’s website:

Your credit report is a credit history. That history documents the life of a debt. As a result, it will show both the original lender and any subsequent collection accounts. However, they are not seen as two separate debts. Instead, a collection account is recognized as a continuation of the original debt.

The account you had with your bank should be listed as charged off. It could also show that it has been sold or transferred to a collection agency. Charged off, transferred or sold are considered a final status, essentially the same as closed. As a result, that account entry is no longer an active debt. However, it will continue to appear on your credit report to accurately reflect the account history.

The collection account now represents the active debt. Usually, a collection account indicates that it was purchased from or transferred from the original lender.

The collection agency may then sell the account to another collection agency. The first collection account then would be reported as sold or transferred, and the new, active collection account would be added to the credit history.

Because a collection account is treated as a continuation of the original debt, it will be deleted at the same time as the original account. The original account and subsequent collection accounts will be deleted seven years from the original delinquency date. The original delinquency date is the date of the first missed payment after which the account was never again current.

The collection agency is required by law to carry over that original delinquency date from the first account and report it to the credit reporting company. That ensures the collection account is deleted at the correct time.

In other words, Shawn, you may see the same $615 appear four times on your credit report, but three of those will essentially reflect the account as closed, with only the last one showing it as open. So while to you it may appear that your credit history reflects four $615 loans – and four bad marks – to the computer reading your credit history and determining your credit score, it’s only one loan and one bad mark.

At least that’s the theory. Make sure that it’s happening in practice. Go back and look at your credit history and see that each of your four debts is only reported as open by one company. If you suspect there’s a duplicate entry, challenge it: See 3 Steps to Improve Your Credit History for details.

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