Credit Score How Credit Works

Collection Agencies May Be Using Your Credit Information

Written by John Ulzheimer

The fact that lenders routinely use credit scores to help them in their decision making processes is well known. For example, when you walk into a car dealership to finance a new vehicle you expect your credit report and score to be pulled.

However, lenders aren’t the only ones who are able to look at your credit reports. Many other types of companies are able to access your credit reports and scores, often without your knowledge or even your permission.

Collection agencies fall into this category. They can access your credit reports and scores, whether you like it or not.

Is it Legal?

It’s pretty common to feel angry when you first learn that collection agencies can access your credit without your permission. You may even wonder, “Is this legal?”

The answer, disturbing though it may be, is YES. It is completely legal for a collection agency to access your credit information without your knowledge or permission if it will be used to aid their collection efforts.

The Fair Credit Reporting Act (FCRA) defines a series of “permissible purposes” for accessing consumer reports, including credit reports. The Act states that any consumer reporting agency (this includes the credit bureaus) “may furnish a consumer report…to a person which it has reason to believe intends to use the information in connection with…collection of an account.” (FCRA) [15 U.S.C. § 1681b]

Why Collection Agencies Use Credit Reports


Skip Tracing:

Pulling credit reports allows collection agencies to locate hard to find consumers. Your credit reports list your current and former addresses – very useful information for a collection agency that is trying to find you in order to collect a debt.

Determining What You Can Afford:

Collection agencies also may review your credit reports in order to evaluate your ability to pay them. Doing so helps collection agencies to determine whether or not you can afford to pay what you owe and even whether or not you may be a good candidate to sue.

Why Collection Agencies Use Credit Scores

Many collection agencies and creditors also rely on specialized types of credit scores, such as Collection Scores, to help increase their profitability.

Collection scores help collection agencies save time and money by identifying which debtors are more likely to actually pay back their debts. If your collection credit score indicates that there is a high probability of you paying back an outstanding debt then a collection agency will probably focus more effort on contacting you than it would for someone else who is less likely to pay.

Credit Score Impact

You probably familiar with the fact that when someone accesses a copy of your credit report a record of the access, known as an inquiry, is posted. Soft inquiries, such as when you pull a copy of your own credit for review purposes, will not damage your credit scores.

On the other hand hard inquiries, such as those that occur when a lender pulls a copy of your credit reports during a loan application, can lower your scores.

Collection inquiries are variable, which means they are sometimes listed as soft inquiries and other times listed as hard inquiries. If they’re listed as soft inquiries then no harm, no foul.  However, if they are listed as hard inquiries then there is a chance they can ding your scores.

About the author

John Ulzheimer


  • If my Social number is locked so that the third party can not access my report without my authorization will they still be allowed to pull it?

  • If my Social number is locked so that the third party can not access my report without my authorization will it still allow them to pull it?

  • When does statute of limitations begin? The last time credit card was used or when origonal creditor wrote off the account?

    • I had a car repossessed in 2014. I made arrangements to pay back some. Then my husband died in 2017. I recently got a letter demanding the amount I owe. I am a widow and a Senior citizen. I have nothing, no property,nothing. Can they come after me after this long?

  • Good article, and since one probably won’t be buying anything on credit, I would add that by freezing all three accounts, nobody but the CAs will ever see the collection accounts.

  • Collecting money is actually sales, and the best collectors will not make any debtor pay, unless the debtor has the capacity to pay and the desire to pay, the same criteria for extending credit in the first place. Notwithstanding that, the number one reason why debtors pay off collection accounts is to qualify for a home or auto. 25 years as C & C manager.

  • Thanks for information. If there was a way to get out of the mess I am in I would feel a whole lot better. Two years ago I had almost perfect credit for years always paid on tim. Then wife passed with cancer my rental houses destroyed stocks that were in margin calls completely depleted my wealth. So I hit bottom with a bang. Would love to pay back the 60 to 65 grand but just don’t have it.

  • I have had the same item reported twice by the same company a year AFTER I had the item removed. It’s from over 6 years ago. How can I get these people to stop? It’s a company called One Advantage. Please help me!

  • I had an auto loan with Chase and NOT ever missing a payment which was huge!!! They did something illegal and I now want my title and don’t know what to do. It’s too risky to write much detail but they put my loan on my credit as a CHARGE OFF, again no late or missed payments. Harassed family and friends VICIOUSLY. I asked a relative to make a payment if I sent money for it because I didn’t want my (then estranged husband) to know where I was going to live. Although they continued to get payments from me by wire they went into my relatives account and took 2 maybe 3 payments from that account without permission! I found out over a year after! My ex husband has nothing to do with the loan and was not allowed since he had bad history with them including charge offs. I still have the vehicle. I bought it long ago with MY credit and not in bad standing. I reported them to both government agencies Fair Credit Reporting and the other, also BBB. I have letters stating there was no response from them and that there is now a permanent negative mark on them for Unfair and illegal business practice and punishment will follow. Problem is that I tried to get it registered, the DMV said no matter how hard they tried they refused to comply. I have researched and found that CHASE AUTO has a LONG LIST OF HORROR STORIES LIKE MINE! Also in my case I found the dealer has a hand involved. I went in with a pre approval for a trade in and had a vehicle only 1 year old. Excellent standing for years with them too! The finance manager said I was declined (NOT), and they would find another finance company. Into 4 months from the day I got the new vehicle I still had no finance. I demanded my other vehicle to be returned many times. I was contacted by a person who left the Dealership who told me my trade in was SOLD before leaving and I had NOT decided to buy yet. I was window shopping basically. eight hours later I drove the new one home with a signed agreement to return my original vehicle the next day. The finance manager kept stringing me along! There is a lot more between my lines on their side but foolishly he had me sign 3 or maybe 4 copies of the loan application! FRAUD! I don’t know if I have the documents now I may have lost them in a couple of moves. The government agencies have copies. They have been forced to leave my credit but I have a vehicle almost 9 years old with 30,000 miles never hidden from them and no title and unable to register. This was all done during the fraud all of the banks and finance companies were loaded with PREDITORS.
    My credit is back from ID Theft and Fraud now and it was not easy. I used to carry 800+ fico.
    Any suggestions?

  • I was operated on for cancer. I was one month missed payment doto the fact I was in the hospital for 3 weeks. It took 7 months for me to catch up with my payment to the B.O.A. They tried an accelerated foreclosure I now have 7 late payments on my credit score. I wrote to the B.O.A. explaining everything complete with pictures doctor bills etc. and they said tough. what can I do

Leave a Comment