Working With Collection Agencies
A collection becomes known as a “charge-off” when it is sold to a third party collection agency. This happens when an initial creditor decides to quit contacting you to collect the debt. Collection agencies are proficient in getting you to part with your money.
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.
A collection ” even if paid ” alerts lenders or employers that you defaulted in the past. Lenders look for behavior like this as a prediction of future behavior and potential for default.
Can Collections Be Removed?
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.
Ultimately, you will need to dispute every negative entry on your credit report. Often, following this procedure will result in the removal of several negative entries with no additional follow-up.
If a Dispute Does Not Work, What Next?
If your dispute is unsuccessful, you may consider additional methods. At this point, an experienced and knowledgeable attorney may be helpful.
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