Which states have the most debt collection accounts? New rankings revealed

Debts that go unpaid for a long time will typically go to a debt collector.

When the original lender elects to hand over a debt to a debt collection agency, that will show up on the borrower’s credit report, often significantly impacting their credit score.

Wallethub analyzed data from 50 states to determine which had the most debt collection accounts. 

By the numbers:

Wyoming had the most collection accounts, with an average of more than four accounts per resident.

The state also ranked highest on balance averages at $2,024 per collection account.

Coming in second was Alaska, with an average of over three collection accounts per resident and an average balance per account of $1,687.

Montana rounded out the top three states with an average of three collection accounts per resident and an average balance per account of $1,805. 

How debt collection accounts impact credit scores 

Dig deeper:

When and if an account ends up in collections, it can impact a person’s credit score for up to seven years from the date the account first became delinquent, WalletHub said.

There are no set guidelines as to when an account gets booted over to a debt collection agency, it depends on how the original lender decides to deal with delinquent accounts, according to Nerdwallet. 

Once an account is sent to a debt collector, the owner’s credit score has likely already taken a hit.

But how big of an impact that debt collection account can have varies, Nerdwallet said.

If the account owner has a 700 or above credit score, they could see a far more significant impact than someone who has a score in the 500s.