I recently checked my credit report and found a $104 collection account dating from July 2006 for an unpaid utility bill. Xcel Energy claims I owe $86 from 2001, when I was in college, but I was never notified. This has knocked 100 points off my credit score. What can I do?

You may have to bite the bullet and pay the bill. That will at least get the collectors off your case -- but unfortunately it won't help your credit score. "Having a collection account on your credit report is statistically significant for predicting future delinquency," says Craig Watts, of Fair Isaac, the company that compiles the FICO credit score. "What you do later on what that account doesn't change its significance to the scoring formula."

Your score should gradually improve if you pay your bills on time and keep your credit-card balances low. But if you feel Xcel did not make a good-faith effort to contact you, you can try to boost your score by having the collection account removed from your record. Ask the company for a copy of your payment history that specifically records where the past-due notices were sent. Or ask the consumer-affairs office at the Minnesota Public Utilities Commission to intercede on your behalf.

One positive note: Under federal law, negative items must be removed form your credit record after seven years. For accounts in collection, the clock starts 180 days after the original account was first delinquent, says Watts. Because your original bill was from 2001, the black mark should be removed by about 2008.

For more information about improving your credit score, see Demystifying Your Credit Score. For more information about dealing with debt collectors, see Debt Police Who Go to Far.

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