How Many Points Does a Collection Drop Your Credit Score?

If you’re a hopeful St. Louis car-buyer looking to get a car loan but you’ve recently had a debt collection, you may be wondering, “how many points does a collection drop your credit score?” Since you want a strong credit score to get a better car loan interest rate, we understand why you’d want to know if you have a collection on your credit report, how many points will it cost you? Read on below to learn more.


Collection On Credit Report: How Many Points Does Credit Drop?

Unfortunately, a debt collection is one of the most detrimental events that can occur on your credit report. First, let’s cover the events that lead to a collection, so Herculaneum drivers can hopefully avoid it:

  • You don’t pay an outstanding credit card balance for over 180 days
  • The issuer makes a charge-off on your account, which stays on your credit history for seven years
  • The card issuer then hires a third party collection agency to recover the money. Or, they sell your debt to a collection agency altogether
  • Ideally, you pay the issuer before they sell your debt
  • If they do sell your debt before you pay, you’ll have two detrimental events on your account

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.


Why Is the Credit Drop So Significant?

What causes the impact of a collection on a credit score to be so high? When there’s a collection on your credit report, how many points are dropped is dependent on:

  • The date — the more recent the event on your credit file, the more negative the impact
  • Medical debts and other debts are treated the same
  • The amount of collection is irrelevant to how many points a collection drops your credit score

Get More Car Finance Help From Green Light Auto Credit

We are proud to serve our Florissant-area customers with helpful credit guidance and great auto finance plans. If you have more questions related to building your credit score, securing a car loan, or other auto finance inquiries, contact us today!

Customer with her new vehicle