debt collections

Debt Collections

It can be hard to fix your credit and improve your credit score when multiple collections wait for you. Fortunately, removing debt collections from your credit report is entirely possible. There are things you can do to successfully remove them from your credit and improve your credit score. But first, you need to know how they affect your credit.

Collections remain on your credit for up to seven years. Although you have already paid that, debt collections are still considered a negative account.

How Debt Collections Affect Your Credit

When you don’t pay your dues for months, the creditor will stop contacting you for the time being. If you still don’t pay, expect the creditor to forward your account to third-party collection agencies. However, creditors do send you a final notice before sending your account to the collection agencies.

You can still save your credit when you try to make some payment arrangements with your creditors. Otherwise, you can expect a 50 – 100 point drop in your credit score. The better your credit, the more points you lose. Over time though, collections will affect your credit less and less. 

You must communicate with your creditor before they forward your account to third-party collection agencies. When you don’t do anything, it’ll be too late. Your collections will stay in your credit for seven long years.

Pay Off Collections And Raise Your Credit

Both FICO and VantageScore have recently updated their scoring; they decided to ignore paid collection accounts. That is good news because paying collections can now raise your credit score.

When you decide to pay off collections, ensure that the amount is still something you owe. There are debt buyers that would collect debts that you no longer owe. Before you settle, ensure that you have them verify the debt.

How To Remove Debt Collections From Your Credit

Be careful with debt buyers or “junk debt buyers” collection agencies. They go after old debts and then report the collection accounts to your credit report to compel you to pay them. Other times, they may buy debts that you have already paid.

Most third-party collection agencies would buy debts multiple times, which means that you will have many collection accounts to your credit report, hurting your credit score even more.

How do you remedy this? Start sending a validation request to the collector who says you still owe them money, do not pay the collection agency unless they give you the validation that you still owe them money.

Reporting Limit Vs. Statute Of Limitations

When it comes to collection accounts, you need to be aware of the reporting limit and the statute of limitations.

The Fair Credit Reporting Act of FCRA sets the reporting limit on collection accounts. It’s seven years from the date of the last activity so, that most will charge off after 18 days.

The statute of limitations depends on the state. It could be three or up to six years. When it has passed, the debt collector can’t legally sue you. However, the debt may still appear on your credit.

Some collection agencies may force you to pay by posting a recent date on your account. Keep in mind that this is illegal.

Medical Debt Collections

For your medical bills, debt collectors will have to wait 180 days before they can report an unpaid bill to the credit bureau. That means that you still have six months to take care of your bills before they land on your credit.

After getting the bills, ensure that the information is indeed correct. If you’re confused, don’t hesitate to contact your insurance company. 

Always review your bills and compare them to your EOB, and ensure that the charges are accurate. As soon as you know how much you owe, find ways to pay for it. As much as possible, never ignore your bills, or they will appear on your credit.

Fortunately, medical collections, just like anything else, can be removed from your credit. The key to this is to be careful about any information associated with your debt. There are guidelines to follow when disputing medical collections.

How To Remove Collections

Remember: Removing your collections can significantly improve your credit scores. They can remove when there are errors or reports of late payments that were not late payments. That is because debt collectors don’t care about your credit. All they want is for you to pay up. Some of them don’t even care about the law anymore.

You can remove the collections when you file a dispute for inaccurate information. You can file this at the three major credit bureaus.

Another way to remove any negative information from our credit is when you “pay for delete.” Agree with the debt collector that once you have fully paid off your debt, they will remove the collections from your credit report.

Ensure that you have the agreement in writing. Keep in mind that unless it’s on paper, it never exists.

You Can Ask For Help

There are credit repair companies that can also assist you in removing collections from your credit report. These companies will be the ones who will dispute the error with the three major credit bureaus. There’s no need for you to contact them anymore.

These companies can help you with anything, including the tracking necessary to ensure that both the collection agency and the credit bureau comply with the FCRA. They will take care of everything for you. 

If you have a collection problem with your credit, don’t hesitate to contact credit repair companies for assistance. They have the tools needed to remove the collections from your credit.

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