How to Deal with a Collection Agency

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," or a collection, it is sold to a third party collection agency.

Collection agencies are hired because they are experts at getting you to part with your money no matter what it may mean for your credit history.

How Will a Collection Damage my Credit Score?

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."

Collections are one of the primary reasons you may be denied for all sorts of new credit.

Just one collection on your credit report may prevent you from being approved for a mortgage!

A collection - even if paid - is very damaging to your credit history. It essentially alerts lenders or employers that you defaulted in your past. Lenders look for behavior like this as a prediction of future behavior and potential for default.

Can I Remove a Collection from my Credit Reports?

The short answer is YES! Contrary to what the bill collector told you, collections do not have to stay on your credit report for the next seven years.

In fact, quite the opposite is true.

A collection will remain on your credit report for as long as either the credit bureau or creditor want to report it. In other words, the information on your credit report is in the sometimes sloppy and error-prone hands of creditors and credit bureaus.

Of course, it is then up to you to persuade these companies to report accurate positive information about your payment history! In other words, you ultimately control how long a collection stays on your credit report.

The Fair Credit Reporting Act (FCRA) gives you the right to dispute negative information on your credit report - including collection agencies. You may be surprised to learn how many people got a fresh start just by removing collections from their credit report.

You will first need to obtain a copy of your credit report to determine which collection agencies are on your report. Each bureau has a separate file about you so you should not expect them to be identical.

Each negative collection listing must be individually challenged. Remember, several collection agencies may be reporting a single debt on your report!

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.

What is the Next Step if a Dispute Doesn't Work?

If the bureau ignores your dispute or updates the negative item, then you may need to try escalated dispute methods which involve negotiation with the creditor collection agency. A good consumer credit attorney can lend a hand with these tactical negotiations. A seasoned attorney on your side can save you money and hours of frustration and headache.

Lexington Law is ready, willing, and able to help. Their credit experts stand ready to receive your call and do what they do best - work with you to restore your credit standing.

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