How Unpaid Debts Affect Credit Scores

Having a bill in collection won't necessarily hurt your score.

I recently received a letter from a collection agency that is trying to collect on a bill of about $9 from five years ago. Will this affect my credit score, which is currently fine? Is there a statute of limitations for collecting on old debts?

Having a bill go to collection can have a big impact on your credit score -- especially if you have a high score now. But FICO, the company that developed the commonly used FICO score, changed its calculations in 2009 to disregard collection accounts and other dings on a person’s credit file when the original balance owed is less than $100.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.