Working With Collection Agencies
A collection, also known as a charge-off, is an old debt the original creditor has given up trying to collect. At the point your debt becomes a charge-off, it is sold to a third party collection agency. Collection agencies are hired because they are experts at getting you to pay.
Will a Collection Damage my Credit Score?
The reporting of a collection will cause havoc with your credit report. Your credit score will decrease as a result of the charge-off and the individual credit entry will go from bad to very bad. Unpaid collection, collection – paid or settled for less, and paid collection are variations which a reported collection can take with regard to your credit report.
Even if a collection is paid, lenders are aware that you once defaulted. They look for this type of activity as a way of determining your credit history and the possibility that it may happen yet again.
Is It Possible to Remove a Collection?
A charge-off DOES NOT need to remain on your credit report for 7 years. The fact is people are often successful in removing a charge-off from their credit report.
A collection will remain on your credit report for as long as the credit bureau or creditor reports it. Consequently, it is up to you to persuade these companies to report accurate positive information! In other words, you ultimately control how long a collection stays on your credit report.
Under the Fair Credit Reporting Act (FCRA), you have the right to challenge any negative entries listed on your credit report. A copy of your credit report will need to be obtained in order to review the listed information and determine which collection agencies are present. You should not expect your credit reports to be the same as the credit bureaus maintain a separate file on your credit activities.
To begin the process, you should challenge each negative item on your credit report. Several negative items may well be removed by following this procedure alone.
If a Dispute is Denied, What Are My Options?
If you cannot convince a credit bureau to erase a negative collection from your credit report, you might want to consider obtaining some legal guidance as you move forward. An attorney who is knowledgeable in credit matters can be invaluable at this stage of the game.
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