Collections And You

At one point in time, we have all gotten a letter concerning an account that has gone into collections. If you are like most people you probably throw the letter away and never gave it a second thought. This is a mistake, especially if you are concerned about the state of your credit.

An account that has gone into collections, no matter the amount, is a devastating blow to your credit rating. Ideally, you should try to keep up with your bills but we have all been unable to from time to time. If you find that you are unable to pay a bill talk with the company. Many companies and organizations are willing to work out a payment plan so the account is not given over to a collection agency. After all, the company would rather have some money instead of none. If it is too late for such negotiations and your account is shown as delinquent then there are still actions that can be taken.

A good credit rating is important for a variety of reasons; especially now as the use of plastic over paper is growing. With a credit rating that is favorable, you will be able to get a lower interest on loans, better mortgage deals, and will even be a more desirable job applicant. A poor credit rating can ruin many opportunities so it important to avoid anything that may cause it to fall. Credit ratings can be damaged a number of ways; one of the worst is a delinquent account that has gone to collections.

You need to take action as soon as you get a collection’s notice. You will first want to make sure the loan is legitimate. If you can not remember having the account then call the company where the account is said to be from and inquire about the debt. If they have no information, inquire with the collection agency. After verifying that the debt is yours you will then be able to spring into action.

Ideally, you will want to have the debt removed completely from your credit report and all mention of ever having anything in collections erased. The agencies are not obligated to do this even if you have paid the delinquent account in full. In fact, the collections can stay on your credit report for up to seven years. In those seven years, even if you paid the account, you will be subjected to the adverse effects of having a poor credit rating.

Before you choose to start paying on the account you may want to challenge the collections report. Anyone at any given time has the right to challenge any negative item on the credit report. This gives the common man a chance to fight an entity that is often times large and intimidating. If the collections agency or the credit bureau is unable to verify the authenticity of the debt then they must delete it. As an incentive to those wanting to challenge those nasty items on your credit report think about how busy that credit bureau is. Is your debt large enough for them to stop what their doing and take notice? If not then you might as well challenge it. If they can not get back to you in a timely manner then the item is deleted whether it was a legitimate claim or not.

If this step does not work then you will need to work towards repayment. Contact the collection company in writing to negotiate what you need to do to have the item deleted from the credit report. Remember, they are not obligated to clear the collection account from the report. There are other status options that can be placed on your credit report as you repay the debt. These are not as good as having the debt absolved completely.

Before you start repayment you will need to look into the statue of limitations on the debt. If it is an older debt then your stature of limitations could be nearing the end and you will not necessarily be liable for the debt anymore. You should double check, however, just to be sure as each collections company will handle things differently.

Whatever the case and however you can make sure to take care of the debt. A collections statement will have only negative affects on your life disqualifying you from loans and favorable interest rates. Do all you can to take care of that debt.

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