Subscribe Feed (RSS)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.
Will My Credit Score Be Affected By a Collection?
Once a debt has been sold, the way it is reported on your credit record changes from bad (late bill) to terrible (collection). Collections may appear in various forms on your credit report including: unpaid collection, paid collection, or collection – paid or settled for less.
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.
Can Collections Be Removed?
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 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.
You have the right, pursuant to the Fair Credit Reporting Act (FCRA), to dispute any negative information contained on your credit report. To determine what information is contained on your report, you will need to request a copy of your credit report from the credit bureaus. A separate file related to your credit activities is maintained by each credit bureau.
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 Does Not Work, What Next?
If the bureau ignores your dispute or updates the negative item, you may need to try escalated dispute methods. A seasoned attorney can save you money and hours of frustration.
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