Collection Agencies Reporting the Same Account Twice

Reader Question: If you have an account that was sold to multiple collection agencies, can each individual agency report the same item to the credit bureaus? This would result in multiple collection agencies reporting the same item.

It's possible that several collection agencies could report the same account to the credit reporting agencies. How many times the item was reported to the credit reporting agencies is not your primary concern. The real question and concern is, how many times does the negative item actually show up on your credit report?

• If it was reported more than once, but it was rightfully identified as the same account, then it may only show up once on your credit report.
• But if the reporting agencies treated it like a separate item each time, it might show up multiple times on your report. Now you have a duplicate entry situation that needs to be dealt with.

Duplicate entries on a credit report can certainly affect your credit score. In fact, it's one of the most commonly disputed errors that consumers deal with. So you'll need to keep an eye on your credit reports to see if the same negative item (such as an overdue account) shows up more than once.

It's worth mentioning that there is a situation where an account can show up more than once on your credit report -- legitimately. Let's say I ran up some debt on a store credit card and then stopped making payments. The store transfers the account to a collection agency. And eventually, the store writes off the debt for their own bookkeeping purposes (i.e., they "eat" the loss). This situation could produce two entries on a credit report in this way:

• The store could report my account as a "charge off."
• The collection agency could report the same account as "in collections."

So the account number would show up on my credit report twice, but with a different status for each entry -- one marked as a charge-off and the other as being in collection.

If the same exact item does appear to be listed more than once (with the same status), you can dispute this with the company that produced the erroneous report, and it's important that you do. Overdue accounts fall under the "payment history" in your credit file, and this accounts for about 35% of your overall credit score. It counts more than any other single item. This is why it's so important to ensure that negative items aren't duplicated in your payment history.

In theory, only one collection agency can handle a debt at one time. So it should not be reported by more than one agency at any given time. But there's a big of difference between theory and reality. Often, one collection agency will transfer an overdue account to a different agency, and this is often where the duplicate entry situation arises.

Hope that helps you out some. Good luck.