People can’t accept it easily if they get a call from debt collectors or if they see a collection account on their credit report. These situations are quite embarrassing. You may not remember, but collections don’t forget to drag your credit score down due to your old unpaid bills or a missed payment. It stands like a big barrier between you and your financial progress.
But don’t be afraid. We are here to show you the path to getting free from this barrier. By following the right steps, you can get rid of collections and improve your credit.
Impacts of Collections on Your Credit
Your account didn’t go to collection overnight. If you fail to pay your debt for a certain period, lenders may sell it to a collection agency. After that, you will find “in collections” on your credit report. This thing drastically hurts your credit score. Let’s know the consequences.
- A Collection agency sends several letters or makes calls demanding payment
- They may deny the loan application or charge a higher interest rate for the loan.
- They can take legal action if you don’t contact them, or it remains unpaid
- It stays on the credit report for several years
- Decrease your significantly significantly
Don’t be afraid. This is not the end. The good news is the collection doesn’t stay forever. You can repair it by following the right steps.
Steps To Follow
- Review the Credit: Download your credit report from three major credit repair bureaus: Experian, Equifax, and TransUnion at AnnualCreditReport.com, and find out the issues relevant to collections. Issues like;
- Collection agency name
- The name of the collection agency
- Due amounts
- The day of adding collection accounts on the report
- Other errors
If you are not responsible for the collection account and it is reported inaccurately, or is past the reporting limit (typically 7 years), you have the right to dispute it and request removal.
- Find the Ways of Resolving the Debt: Based on the validity of collection, you have a few options to resolve the debt. These are;
- Pay the full amount if possible (the collection account will stay on the report with a paid mark).
- Negotiate with the creditors based on a pay-for-delete agreement. Some agencies agree to delete the items on payment if they get payment. (Do the process with a written statement)
- If it’s tough to pay the full amount, you can negotiate with the creditors to pay a small amount with the “settled” mark.
No matter how you want to resolve the collection issue, do it properly. It proves you as a responsible borrower to the lenders. It increases credibility.
- Rebuild a Positive Credit Habit: It’s harder to maintain than to gain. So, to maintain a good credit or to avoid an embarrassing credit situation, build a positive credit habit by
- Making timely payment
- Using less than 30% of available credit
- Taking a credit builder loan if necessary
- Using a secured credit card
- Avoid applying for new accounts within a short period of time.
The more positive things you practice or positive information is added, the more negative items will fade away.
Let Credit Repair Professionals Help
If you are dealing with collections and can’t understand how to clean your credit or start the repairing process, you can hire professionals. Rebuilding or boosting your score can feel like a hassle if you do it by yourself. It is tougher when your account goes to collections. You might be lost in the middle of the credit rebuilding process. In this situation, feel free to hire an expert who can boost your credit score by following all the processes with laws and regulations.
Whether you live in Florida, New Jersey, California, Pennsylvania, or Virginia, an experienced team of Great American Credit Repair will guide you in completing the credit rebuilding process with legal activities. Great American Credit Repair has been helping people fix their credit since 2008.