HowDebtsinCollectionsAffectYourCreditAndYouGettingALoanFromABank

Information about HowDebtsinCollectionsAffectYourCreditAndYouGettingALoanFromABank

Published on July 20, 2014

Author: marlycrist

Source: authorstream.com

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PowerPoint Presentation: H o w D e bt s in C o lle c t i o n s A ff e c t Y ou r C r e d it A n d Y o u G e tt i n g A L o an F r o m A B a n k Debt Collection What i s a co l l ect i on? A collection is an account that has been sold to a third-par t y debt collecto r . I f y ou become delinqu e nt--that is, m i ss several p a y m ents for a n y t hing f r om a medical bill to a credit card bill--the c o m pa n y o w e d w i ll often w r ite o f f this debt as a loss and sell that it to a collection agen c y . The collection agent w i ll then att e m pt to collect the rep a y m ent fr o m y o u. W h i l e di f f erent creditors and lenders have di f f erent policies, m a n y credit card accounts are sent to a collection agen c y after 180 d a y s o f non-p a y m ent. Both the original creditor and the collector are able to update the account on y our credit report w ith a "collection" status and th e y are not required to tell y ou that y o u r account is being sent to collections. What does i t mean f o r m y cre d i t? If y o u have an account go into collections and reported on y our credit, y o ur credit score m a y drop b y a substantial amount Y ou can see h o w m u ch this w ould af fect y o ur score w ith Credit S i m ulato r . The degree to w h i ch a collection hurts y our credit score is direct l y correlated w ith h o w high y o ur credit score is w h e n the collection agen c y reports the debt. The higher y our score, the m o re points y ou can lose. In addition, the a m ount of da m age to y o u r credit score is also dete r m ined b y the collection a m ount, or h o w m u ch y o u o w e. So m e scoring models n o w have a w a y o f d if ferentiating be t w e en consumers w h o have clear debt m a nage m ent proble m s and those w h o on l y have minor accounts in collections. For ex a m ple, if the original debt y ou o w e d w a s less than $100, the resulting account in collections m ay sh o w up on y our credit report but it ma y not hurt y o u r credit score. The resulting credit score drop f r om having an account in collections w ill direct l y i m pact y o ur f u ture f inancial plans, as it m ay cause y ou to be denied f or credit cards and loans, especial l y i f the collection is recent or r e m ains unpaid (or both). T i ps on w h at to do w it h an account i n co ll ect i ons Unless y o u negotiate w i th the collections agen c y to remove the ma r k , accounts w i t h a "collection" status can st a y on y o ur report for up to seven y e ars, w h ether or not y o u p a y the debt ba c k . W hi le y o u are w o r k ing out w hat to do w i th y o ur account in collections, m a ke sure to keep y o u r other debts and accounts up-to-date. As time passes, the collection account ma y have a less sign i f icant impact on y our credit. In addition, if y o u p a y all y o ur other bills on t i m e, doing so could help y o u r credit score recuperate from a debt collection. Y ou can also atte m pt to lessen the ef fects on y o ur score b y p a y i ng it o f f and negotiating w i th the collection agen c y to m a r k it as "paid in full" or "settled." PowerPoint Presentation: H o w to d i spute an erroneous ac c ount i n co ll ec t i ons If it is not y o ur debt, y ou are not required to p a y it and creditors cannot list it on y o ur report. In addition, i f the seven- y e ar period is up and the "collection" status still r e m ains on y o ur report or i f y ou are still being contacted about a ve r y old debt, it is possible that the account has been sold and resold a n u m ber of times and y ou should dispute the debt f r om y o ur credit report. There is no statute o f limitations on h o w long a collection e f f ort can last, but some states do have a statute o f l i m itations on h o w long a creditor or collector has to t a k e legal action w i th y o ur debt. Learn about h o w to dispute w rong i n f o r m ation on y o ur credit report. D e bt c o ll ec t ors D e bt Co l le c t or Debt Collection Agen c y

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