If a Debt Is Not on My Credit Report, Do I Have to Pay It?

Banking

Not all debts show up on your credit report, BUT that doesn’t mean you don’t owe them. Creditors aren’t under any obligation to report unpaid debts to the credit bureaus. They can if they want, but they aren’t required to do so.

What does this mean for you?

Can a creditor, or collection agency harass you for payment if the debt isn’t on your credit report?

They can. Here’s why.

couple on computer

What does it mean when a debt isn’t on my credit report?

You can borrow money for instance personal loans or student loans and not have it show up on your credit report. Even some mortgage lenders don’t report the debt to the credit bureaus. Most private creditors don’t report to the credit bureaus – it’s another expense they don’t want to take on, but that doesn’t mean you don’t owe the debt.

It also doesn’t mean the debt won’t show up on your credit report if you don’t pay it.

Say, for example, you decide you aren’t going to make your loan payment because times are tough and you know they don’t report to the credit bureaus. If you go long enough without paying the debt, the lender could send your account to a collection agency.

If that collection agency reports debts to the credit bureaus, suddenly the debt shows up on your credit report in the worst way possible – as a collection.  This would have a negative impact on your credit history and lower your credit scores.

Do collection accounts always appear on a credit report?

Collection accounts don’t always appear on a credit report. Some collection agencies don’t report right away. If they’re able to secure the payment from you without reporting it to the credit bureaus, it increases their profits, so some wait.

But, if you don’t pay the debt, the collection agency may try to leverage your payment by reporting to the credit bureaus.

The minute a debt collection agency reports your debt to the credit bureaus, it hurts your credit score and chances of securing new credit. This may make you more likely to make good on your debt.

Even if a debt appears on your credit report, don’t automatically pay it without looking into it, as it might be an incorrect debt. Make sure all information is accurate on the account. Does the collection agency have the right to collect in your state? Do they have all the right information? Does the account belong to you?

If anything they reported is unfair or inaccurate, you have the right (by law) to dispute it. Before you pay the debt, try getting it removed from your credit report. You’ll still need to negotiate with the debt collector and come up with a payment plan unless you can prove the debt doesn’t belong to you at all. If it does, though, you may be able to work out a payment arrangement.

If you have inaccurate or incomplete collection accounts on your credit report, the Fair Credit Reporting Act gives you the power to dispute this information directly with the credit bureaus or creditor. 

What if the original account is on your credit report?

Sometimes you can get hit twice with the same debt. If you defaulted on a debt with a creditor that reports debts to the credit bureaus and then they sold it to a collection agency that reports to the credit bureaus, you’d see the debt twice.

Not only will you see the debt twice, but so will anyone that pulls your credit. This means they’ll see that not only did you have late payments with the original creditor, but you got so behind that they sent it to a collection agency.

Your original creditor may show the account as ‘charged off’ or something similar. This shows that you didn’t live up to the agreement you made and still owe the debt, but the creditor sold it off to someone else to handle.

If you’ve reviewed your credit reports and neither the original account nor the collection account is appearing, gather as much information as you can from the collection agency and the original lender to help you determine if you owe the money.

See also: Should I Pay the Debt Collector or Original Creditor?

How long does a collection stay on your credit report?

If the creditor sent your account to collections, it could remain on your credit report for seven years. The clock starts from the original date you were delinquent. This means the original debt and the collection can sit there for seven years.

Even if the collection agency doesn’t report the debt to the credit bureaus right away, hoping you’ll pay it, the clock starts on the original date of delinquency. 

What can you do about a collection that’s not on your credit report?

You may wonder what you can do about a collection that’s not on your credit report.

Should you pay it or ignore it?

Will it hurt you in the long run if you don’t pay it?

These are all valid questions, but the bottom line is that you must satisfy the issue. This may or may not mean paying it. First, you have to get down to the bottom of the issue.

Get the Debt Validated

Determine if the debt is valid. If it’s not reporting on your credit report, you’ll have more sleuthing to do. You must determine where the account originated – who was the original creditor? If the collection has been sold multiple times, you may have to do a little more digging. Sometimes collection agencies only hold onto a debt for a few months before they sell it to someone else.

Once you finally get account information, compare your findings. Look at original account numbers, delinquency dates, balance due, and the name of the original creditor. If something doesn’t match, ask questions.

You can write to the debt collector and ask them to prove where the account originated, the account number, and any other information you want to be verified. They must be able to prove beyond a reasonable doubt that you owe the debt to them. 

If they prove it, you’ll need to pay it or at least work out a payment arrangement. Collection agencies are often willing to negotiate too. Most collection agencies buy debts for pennies on the dollar. They then try to collect the full amount from you – this is how they make a profit.

Negotiate with the Debt Collector

But, this leaves room for you to negotiate a lower amount. When you negotiate with debt collectors, start with a lower amount, assuming the collection agency will negotiate – they usually do. Eventually, you’ll land on a number you both agree on, but make sure you get it in writing.

You can also simply ask the debt collector or original collector to remove the collection. This usually involves sending the debt collector or collection agency a goodwill deletion letter explaining your mistake, asking for its forgiveness, and showing them how your payment history has improved. 

If you choose not to pay the debt, be aware that the collector can continue to pursue you for the debt indefinitely – that means calling, sending letters, or suing you for debts still in the statute of limitations – even if it’s not on your credit report. 

Take These Steps Before Paying A Collection

Whether your collection is on your credit report or not, always take these steps to protect yourself.

  • Make sure the account belongs to you. Do as much research as you can to make sure the collection is legitimate, especially if it’s not on your credit report.
  • Negotiate a lower amount; never pay the full amount. But ensure that the collection agency will mark the account ‘paid as agreed.’
  • Get all agreements in writing. This is very important if the collection agency reports the debt to the credit bureaus. If they agree to remove the debt from your credit report after you pay it and they don’t, you can dispute the debt with the credit bureau with your proof.
  • Check your credit 30 days after paying the debt. Make sure the collection agency held up their end of the deal.

Final Thoughts

Do you think, ‘if a debt isn’t on my credit report, I don’t have to pay it’?

Don’t fall for it, because chances are you still have to pay for it. Any unpaid debt is owed, whether it’s on your credit report or not. If a creditor or collection agency can prove the debt belongs to you and let it go unpaid for too long, they can sue you. It’s unlikely, but it does happen.

Don’t rely on your credit report for 100% accuracy. If you have debts not reported to the credit bureaus, you still owe them, and if you default, there will be consequences. If you’ve fallen behind and can’t catch up, talk to your creditors about options, they have to avoid your account getting sent to collections. 

If debt collectors are sent to try and reclaim a debt, you can follow our guide so you’re fully aware of your rights and the ways to proceed. 

Samantha Hawrylack
Meet the author

Samantha Hawrylack is a personal finance expert with a passion for writing and SEO who has been featured in publications like Grow, MSN, CNBC, Clever Girl Finance, Credit Donkey, and more. She writes about various personal finance topics including credit, loans, real estate, investing, and more.