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 My Credit Score Be Affected By a Collection?
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.
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.
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.
What is the Next Step if a Dispute Doesn’t Work?
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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