Collection Agencies and Your Credit Report

Collections and 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 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 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.

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.

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.

See proof of our credit repair success at www.creditforcouples.com and get the truth about credit repair.