How did a collection account for $209 affect my credit score so dramatically?

You defaulted on a debt and it went to collections. That's what affects your score so dramatically. Once you let that happen, the major damage is done - even if you then finally pay it off and even if it's a relatively small amount.

I was in a similar situation when I was 19...Went to Canada and got a traffic ticket...Kept putting it off for a few months...Then finally paid it. I was never sent any notice that it would be sent to collections...A few years later when I pulled my first credit report it was on there. When I applied for my first credit card through Merrill Lynch I was approved for $1000. They said it really wasn't a big deal. So your $200 sent to collections is not a good thing, but I am sure you won't be denied credit over it. Each year that passes it looks older and sillier. If you don't have a credit card then I would recommend getting one and keeping the debt to credit given ratio under 35%. This will help boost your score over the months. Unfortunately I was told these types of filings do not come off for 7 years. So my 7 years just passed in August 2010 and it is finally off my credit file. I did contact the collection agency to tell them to clear it because it was paid. They said they couldn't do anything. I also contacted each credit bureau and filed a dispute (either by email or letter). I think Trans Union or Equifax (1 of the 2) did not have the bill sent to collections showing on their credit file. My score is 710 right now, through Equifax. Just keep paying your bills on time and managing your credit cards and you should be to around 650 within a year....Every 6 months ask for a credit limit increase so that you can have a better debt to income ratio and debt to credit ratio....Also, some credit card companies want to see at least one card with a limit of $5,000 or more. Store cards are also very easy to be approved of. But you'll want to wait at least a year after having your first credit card so you have some type of history...I started with a Best Buy store card and they gave me $3400 right away....A year passed and I requested an online increase and they automatically gave me $6500...Another year passed (which was a couple weeks ago) and I applied for another increase and they gave me $9100.... My first card, the Merrill Lynch, with a $1000 limit is stuck at $2500...But I haven't asked for an increase in over a year...I was denied a couple times so I think they are not willing to give me any more room for a while! My wife just got an FHA mortgage. The cutoff point for being approved of an FHA 30-year mortgage was a credit score of 620.

Any collection account effects your credit file. Collection accounts will stay on your report for 7 1/2 years. Any positive activity should be report. Get your credit report and any positives that are not being reported needs to be handled by calling the creditor and asking them to report it. Phone, insurance and utilities will not show up on your credit file unless you do not pay. Read and learn about credit reports, FDCRA etc. Never let a collection account go this far.