Dealing with Collection Agencies
When an initial creditor decides to stop contacting you to collect an old debt, it is usually assigned to a collection agency. This debt is then known as a "charge-off." Collection agencies are in business because they specialize in getting you to pay off the owed amount.
How Damaging Will a Collection Be to 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.
Lenders look for charge-offs, even if they are eventually paid, because this will alert them to the fact that you once defaulted. This type of credit activity will serve as a red flag to them.
Is It Possible to Remove a Collection?
The short answer is YES! Collections do not have to stay on your credit report for the next 7 years. Quite the opposite is true.
A collection can remain on your credit report for quite some time and credit bureaus and creditors have no reason to remove erroneous entries unless you dispute the information. As such, it remains up to you to contact and convince the relevant companies that they should erase the negative entry. Only you have a stake is cleaning up your credit.
The Fair Credit Reporting Act (FCRA) gives you the right to dispute negative information. You will need to obtain a copy of your credit report to determine which collection agencies are on your report. Each bureau has a separate file about you so don't expect them to be identical.
The general idea is that you must challenge each and every negative mark on your report. Quite often this process will remove several negative items without any further work.
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. - 29866
When an initial creditor decides to stop contacting you to collect an old debt, it is usually assigned to a collection agency. This debt is then known as a "charge-off." Collection agencies are in business because they specialize in getting you to pay off the owed amount.
How Damaging Will a Collection Be to 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.
Lenders look for charge-offs, even if they are eventually paid, because this will alert them to the fact that you once defaulted. This type of credit activity will serve as a red flag to them.
Is It Possible to Remove a Collection?
The short answer is YES! Collections do not have to stay on your credit report for the next 7 years. Quite the opposite is true.
A collection can remain on your credit report for quite some time and credit bureaus and creditors have no reason to remove erroneous entries unless you dispute the information. As such, it remains up to you to contact and convince the relevant companies that they should erase the negative entry. Only you have a stake is cleaning up your credit.
The Fair Credit Reporting Act (FCRA) gives you the right to dispute negative information. You will need to obtain a copy of your credit report to determine which collection agencies are on your report. Each bureau has a separate file about you so don't expect them to be identical.
The general idea is that you must challenge each and every negative mark on your report. Quite often this process will remove several negative items without any further work.
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. - 29866
About the Author:
Discover how I raised my credit score from 582 to 745 in four months with the help of Lexington Law. Learn the truth about quickly and effectively deleting bad credit at www.creditforcouples.com.
