Learn What Collections Does to Your Credit
Bill collectors do not have the best reputation. They may call you at home or work and ask you if you are going to pay the bill you owe. They might call your friends or family to try to collect the money they are owed. Some of the things they do are legal and other things they do may not be so legal. Bill collectors are always walking a fine line between what they can and cannot do to collect a debt.
If you are dealing with a bill collector, you need to know what they can do and how it might affect you. One thing they may do is report the collection to one or all of the credit reporting agencies. This may affect your credit as long as it appears on the report. If you do not have basic information such as how long does a collection stay on your credit report, you could be suffering more than you should. Take the time to learn what happens when you have an account go into collections so you can take control of the situation instead of letting it control you.
What is a collections account?
An account that is in collections is a debt that is owed that has been sold by the original creditor. If you fail to pay a debt the creditor will sell your account to a collections agency. The collections agency pays a portion of the debt when they buy it. The original creditor feels that some money is better than none. The collection agency makes a profit by collecting the full amount of the debt from you.
When you check your credit score and report, you will see that it lists any accounts that are held by a collection agency. There will also be information about the status of the account such as when it went into collections and whether it has been paid.
The impact of a collection on your credit
An account in collections will hurt your credit score. It hurts your score before it goes into collections when the creditor reports the late or missing payments. If the account is in collections, your score will be lowered even further. When you ask how does a collection affect your credit score, you also need to put it into perspective. The amount of time that passed from the time the account goes into collection will have an impact on how much it affects your score. Over time the impact of a collection account will lessen and your score can go up.
Another thing that affects the impact of a collections account is the status. If you pay it in full that will lessen the effect. If you settle the debt for less than what you owed, that will have a more negative impact on your score. If you ignore the debt, it will have the biggest impact.
Repairing your credit
Once you have had an account go into collections, the damage has already been done. The collections can stay on your credit report for up to seven years. It is important that you take some steps to repair your credit from the damage that has happened due to the collections account. There are other things that affect your credit score that you can concentrate on to help improve your score. Your payment history, the amount of debt that you have and the amount of new credit you are trying to get will all either help or hurt your score. If you manage your credit responsibly and work on the other factors that go into your credit score, you can raise your score and reestablish your credit despite the collections.
When it comes to your credit score, time is on your side. If you take action and do the things that need to be done to raise your credit score, you can overcome issues such as a collections account. While some companies may claim they can get the collection removed faster, there is no magic way to get the account removed from your credit report. All you can do is avoid the same mistake in the future.
If you are dealing with a bill collector, you need to know what they can do and how it might affect you. One thing they may do is report the collection to one or all of the credit reporting agencies. This may affect your credit as long as it appears on the report. If you do not have basic information such as how long does a collection stay on your credit report, you could be suffering more than you should. Take the time to learn what happens when you have an account go into collections so you can take control of the situation instead of letting it control you.
What is a collections account?
An account that is in collections is a debt that is owed that has been sold by the original creditor. If you fail to pay a debt the creditor will sell your account to a collections agency. The collections agency pays a portion of the debt when they buy it. The original creditor feels that some money is better than none. The collection agency makes a profit by collecting the full amount of the debt from you.
When you check your credit score and report, you will see that it lists any accounts that are held by a collection agency. There will also be information about the status of the account such as when it went into collections and whether it has been paid.
The impact of a collection on your credit
An account in collections will hurt your credit score. It hurts your score before it goes into collections when the creditor reports the late or missing payments. If the account is in collections, your score will be lowered even further. When you ask how does a collection affect your credit score, you also need to put it into perspective. The amount of time that passed from the time the account goes into collection will have an impact on how much it affects your score. Over time the impact of a collection account will lessen and your score can go up.
Another thing that affects the impact of a collections account is the status. If you pay it in full that will lessen the effect. If you settle the debt for less than what you owed, that will have a more negative impact on your score. If you ignore the debt, it will have the biggest impact.
Repairing your credit
Once you have had an account go into collections, the damage has already been done. The collections can stay on your credit report for up to seven years. It is important that you take some steps to repair your credit from the damage that has happened due to the collections account. There are other things that affect your credit score that you can concentrate on to help improve your score. Your payment history, the amount of debt that you have and the amount of new credit you are trying to get will all either help or hurt your score. If you manage your credit responsibly and work on the other factors that go into your credit score, you can raise your score and reestablish your credit despite the collections.
When it comes to your credit score, time is on your side. If you take action and do the things that need to be done to raise your credit score, you can overcome issues such as a collections account. While some companies may claim they can get the collection removed faster, there is no magic way to get the account removed from your credit report. All you can do is avoid the same mistake in the future.
