Collection accounts remain on an individual’s credit report for seven years and can seriously harm their credit score. A rise in these accounts within a state suggests that residents are struggling to pay their bills. To highlight where Americans’ financial well-being may be most at risk, the personal-finance company WalletHub has released its updated report on the States With the Most Collection Accounts.
| Most Collection Accounts | Fewest Collection Accounts |
| 1. Wyoming | 41. Delaware |
| 2. Alaska | 42. Maine |
| 3. Montana | 43. Maryland |
| 4. Nevada | 44. New Mexico |
| 5. Arizona | 45. Hawaii |
| 6. Georgia | 46. Illinois |
| 7. Florida | 47. Massachusetts |
| 8. Idaho | 48. New York |
| 9. Rhode Island | 49. North Carolina |
| 10. North Dakota | 50. Mississippi |
For the full report and to see where your state ranks, please visit:
https://wallethub.com/edu/
“Collection accounts stay on your credit report for seven years, even once they’re fully paid off, so it’s ideal to not get into this situation in the first place. But if you do have an account in collections, there are several ways you can resolve the issue. You can work to pay off the balance, which may improve your credit score. You can also pursue debt settlement, create a debt management plan, or try to wait out the statute of limitations. No matter what avenue you decide on, you should know your rights and protect yourself from harassment by debt collectors.”
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“Wyoming is the state with the most collection accounts, with an average of more than four accounts per resident in collections. Wyoming also has the highest average balance per collection account, at $2,024. Wyoming saw only a small increase in collection accounts per person, relatively modest compared with other states. However, it recorded the fourth-largest increase in average balance between Q2 and Q3 2025.”
- Chip Lupo, WalletHub Writer and Analyst
Expert Commentary
What are the best ways to avoid debts being sent to collections?
“The most effective way to prevent an account from entering collections is consistent communication with your creditor. Many consumers don’t realize that lenders often offer hardship programs, flexible repayment plans, or temporary deferments, especially if contacted early. Creating a realistic monthly budget, automating payments, and routinely checking account balances can also prevent missed payments from slipping through the cracks. Finally, reviewing credit reports at least twice a year helps consumers catch errors or overlooked past-due accounts before they escalate into collection activity.”
Nicole B. Hickson, MSM, PHR – Professor, Atlanta Metropolitan State College; Adjunct Professor, Langston University
“The best approach is to intervene early, before a missed payment turns into a pattern. Set autopay for at least the minimum, and use reminders for due dates. If cash flow is tight, contact the lender immediately (a phone call is best) and ask about hardship plans, payment deferrals, or modified payment schedules. Many creditors will work with you if you communicate early, but once an account is charged off, your options usually get worse and more expensive. Also, keep your contact information current so you actually receive notices and can resolve disputes quickly.”
Andrei Nikiforov, PhD – Associate Professor, Rutgers School of Business–Camden
How does having collection accounts impact your credit score?
“A collection account is one of the most damaging negative items that can appear on a credit report. It signals to lenders that the borrower was unable to manage an obligation for an extended period, which significantly lowers credit scores, particularly in the first two years after the account goes delinquent. Even if the debt is eventually paid, the notation can remain for up to seven years. While newer scoring models give less weight to paid collections, many lenders still rely on older scoring versions, meaning the impact can be long-lasting.”
Nicole B. Hickson, MSM, PHR – Professor, Atlanta Metropolitan State College; Adjunct Professor, Langston University
“Collection accounts are a major negative event because they signal that a debt became seriously delinquent and was escalated. The impact depends on how recent the collection is, the overall health of the rest of your credit file, and whether there are multiple delinquencies. For someone with otherwise strong credit, a new collection can cause a noticeable drop. For someone with prior delinquencies, it can compound existing damage. Even when the score impact fades over time, collections can still create friction with lenders, landlords, and insurers who review the credit report itself. These can also create problems with job applications and rentals.”
Andrei Nikiforov, PhD – Associate Professor, Rutgers School of Business–Camden
What is the best strategy to deal with a debt in collections and protect your finances?
“The safest strategy begins with verifying the debt in writing under your rights in the Fair Debt Collection Practices Act (FDCPA). Before making any payment, consumers should request a written Debt Validation Notice to confirm the debt is legitimate, the amount is accurate, and the collector has the legal right to collect it. Once the debt is verified, the next step is negotiating a repayment arrangement in writing. When possible, consumers should request that the creditor or collection agency agree to report the account as ‘Paid in Full’ rather than ‘Settled.’ Consumers should avoid paying anything before receiving written terms, as even a small payment can restart the statute of limitations in certain states. Never rely on verbal confirmation; written validation protects you from errors, duplicate collections, or scams.”
Nicole B. Hickson, MSM, PHR – Professor, Atlanta Metropolitan State College; Adjunct Professor, Langston University
“Start by verifying the debt. Ask the collector for validation and confirm the amount, the original creditor, and that the debt is actually yours. If something is wrong, dispute it in writing (ChatGPT is actually very good at drafting responses). If it is valid, your priorities are: (1) avoid worsening outcomes such as lawsuits or wage garnishment where applicable, and (2) negotiate from a position of clarity (you can sometimes reduce your payments by up to 50%). Get any settlement terms in writing before paying. In many cases, you can negotiate a lump-sum settlement or a payment plan. If you have multiple debts, prioritize essentials and high-risk items first (housing, utilities, and an auto needed for work), then address collections. Also, keep your bank account and budget stable. Do not drain emergency funds to zero just to “feel done” with a collection. You want to solve the debt without creating the next crisis.”
Andrei Nikiforov, PhD – Associate Professor, Rutgers School of Business–Camden
More From WalletHub
- States With the Most People in Financial Distress
- States Where People Are the Most Delinquent on Debt
- States Where Credit Card Delinquency Is Increasing the Most
- States Where Consumers Are Adding the Most Debt
- States With the Highest & Lowest Credit Scores
- States With the Most Credit Cards
- States Adding the Most Personal Loan Debt
- States Where Auto Loan Debt Is Increasing the Most
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