What Happens When Your Light Bill Goes to Collections

A $147 light bill from 2023. You moved, forgot about it, or just couldn’t pay it at the time. Now it’s sitting on your credit report, and every time you apply for an apartment or try to get new lights, there it is. Following you around like a bad roommate.

Here’s the thing: your light bill doesn’t help your credit when you pay it on time. But the moment it goes to collections, it can tank your score by 100 points or more. The system isn’t designed to reward you for keeping the lights on. It’s designed to punish you when you fall behind.

Let’s break down exactly what happens when that light bill goes to collections, how long it follows you, and what you can actually do about it.

The Timeline: From Past Due to Collections

Light companies follow a predictable path before they send your debt to collections:

Days 1-30: Your bill goes past due. You’ll get reminder notices, maybe a late fee ($5-$25 depending on the company). Nothing hits your credit yet.

Days 30-60: More notices. Possibly a disconnection warning. Still no credit impact from the light company itself.

Days 60-90: This is the danger zone. If you haven’t paid or set up a payment plan, the light company is likely to disconnect your service. They may also be preparing to “charge off” your account — meaning they’re writing it off as a loss.

Day 90+: The light company either assigns your debt to a collection agency or sells it outright. This is when your credit takes the hit. The collection agency opens a new account on your credit report, and suddenly that $147 bill is dragging down your score for years.

The exact timeline varies by company. Some are aggressive and send to collections within 60 days. Others wait longer. But once your lights get cut off and you don’t pay, collections is almost always the next step.

How Collections Destroys Your Credit

Here’s what makes this so frustrating: paying your light bill on time does almost nothing for your credit score. Light companies don’t report positive payment history to the credit bureaus. You could pay on time for 10 years straight, and your credit file would have nothing to show for it.

But the second a collection agency gets involved, they report it. And a collection account — even for a small amount — hits hard.

What happens to your score:

A collection account can drop your credit score by 50-100+ points
The impact is usually the same whether it’s $100 or $1,000
Newer scoring models (FICO 9, VantageScore 4.0) ignore paid collections, but many lenders still use older models that count them

The 7-year clock:

Under federal law, a collection account stays on your credit report for 7 years from the date of the original delinquency — meaning the first missed payment that led to the account going bad. Not when it went to collections. Not when you paid it off. The first missed payment.

So if you missed a payment in January 2023 and it went to collections in April 2023, the 7-year clock started in January 2023. It drops off in January 2030.

Paying off the collection doesn’t remove it from your report. It changes the status to “Paid Collection,” which looks slightly better to human underwriters (like mortgage lenders reviewing your file). But automated systems often treat a paid collection the same as an unpaid one.

Collections vs. Switch Hold: Two Different Problems

This is where it gets confusing. You can have both a collection account on your credit report AND a switch hold on your ERCOT record. They’re separate systems, and one doesn’t automatically fix the other.

Collection account: A mark on your credit report maintained by the credit bureaus (Equifax, Experian, TransUnion). Affects your credit score. Stays for 7 years.

Switch hold: A block in ERCOT’s system placed by a light company you owe money to. Prevents you from signing up with any other light company in Texas. Stays until the company that placed it removes it.

Paying off a collection might not remove the switch hold. And removing a switch hold doesn’t erase the collection from your credit. You may need to deal with both separately.

If you’re trying to get lights turned on right now, the switch hold is your immediate problem. Check our switch hold guide for how to handle that. If you’re trying to fix your credit long-term, keep reading.

What You Can Do About Light Bill Collections

1. Check if the debt is accurate

Before you pay anything, make sure the debt is actually yours and the amount is correct.

Were you billed for dates after you moved out?
Is the amount higher than your actual final bill?
Did the previous tenant’s balance get added to yours?

Request debt validation from the collection agency in writing. They have 30 days to provide proof that you owe the debt and that the amount is correct. If they can’t validate it, they have to remove it from your credit report.

2. Negotiate a “pay for delete”

A pay-for-delete agreement means the collection agency removes the account from your credit report in exchange for your payment. This is the best outcome — you clear the debt AND it disappears from your credit.

The catch: collection agencies are officially discouraged from doing this by the credit bureaus. Many refuse. But some smaller agencies will agree to it, especially for full payment. It’s worth asking.

How to do it:

Call the collection agency and ask if they’ll agree to delete the account in exchange for payment
If they say yes, get it in writing BEFORE you pay
Pay only after you have written confirmation
Check your credit report 30-45 days later to confirm it’s gone

3. Settle for less

If you can’t get a pay-for-delete, you may be able to settle the debt for less than the full amount. Collection agencies often buy debt for pennies on the dollar. They’ll take 50-70% of the balance just to close the account.

Important: A settled collection still shows on your credit report. The status changes to “Settled” or “Paid-Settled,” which is better than “Unpaid Collection” but still a negative mark. The 7-year clock doesn’t change.

4. Wait out the statute of limitations

In Texas, the statute of limitations on light bill debt is 4 years from the date of the last payment or the first delinquency. After 4 years, the collection agency can’t sue you to collect the debt.

This doesn’t mean the debt disappears. It just means you have a legal defense if they try to take you to court. The collection can still sit on your credit report until the 7-year mark.

Warning: Making a partial payment can restart the statute of limitations clock in Texas. Before you pay anything on old debt, understand what you’re doing. Read our old utility debt guide for the full picture.

5. Dispute errors on your credit report

If there’s anything wrong with how the collection is being reported — wrong amount, wrong date, account you already paid — you can dispute it directly with the credit bureaus.

File disputes online with Equifax, Experian, and TransUnion. They have 30 days to investigate. If the collection agency can’t verify the information, the entry has to be removed.

Getting Your Lights On While Dealing With Collections

A collection account on your credit doesn’t stop you from getting lights. It’s the switch hold that blocks you. If you have a collection but no switch hold, you can still sign up for service — though some light companies may require a deposit based on your credit.

Here are your options:

If you have a switch hold: Pay off the debt (or negotiate a settlement) with the company that placed the hold. Once they confirm payment, they notify ERCOT to remove the flag. This takes 1-3 business days.

If you have poor credit but no switch hold: Look at no-credit-check options. Prepaid lights don’t check your credit at all. You pay upfront and use what you pay for. No deposit, no credit check.

If you need lights today: Prepaid plans can often get you connected same-day, regardless of credit or collections. It’s not the cheapest option long-term, but it gets the lights on.

The Bottom Line

An unpaid light bill sitting in collections can drag down your credit for 7 years. The system isn’t fair — paying on time gets you nothing, but falling behind costs you everything.

But you have options. Validate the debt. Negotiate a pay-for-delete if you can. Settle for less if you can’t. And if you just need to get your lights on right now, prepaid plans don’t care about your credit history.

Don’t let one bad bill from years ago keep you in the dark.

Related reading:

This guide is for informational purposes only and does not constitute legal or financial advice. For official rules on debt collection, visit the CFPB or consult a licensed attorney. NoDepositLights.com is powered by Compare Power (PUCT License BR190020).