A key focus when trying to maintain a good credit score is to avoid having a debt be sent to collections. A debt collection on your credit report indicates a debt is significantly past due with little or unsuccessful efforts to work with the creditor to resolve the situation.
Sometimes when you start working to improve your credit score, you find debts you have paid off that were in collection status are still showing as outstanding. To prevent this from happening, as you negotiate with the debt collector, get an agreement in writing that they will update your credit report to a “paid” or “current” status once the outstanding balance has been satisfied. Most credit reports reflect the status of each account for the last twelve to twenty-four months. The sooner you can get it changed to a favorable rating, the more it will contribute to improving your credit score in the long run.
The best option is actually to request – and receive – confirmation in writing, that they will not merely upgrade the account status but remove it in exchange for payment. This will significantly improve your credit score. It is important that you are careful in your conversations with the creditor, however. If they sense that you have the means to pay the entire amount due, they will be less likely to work with you and you risk putting yourself back on the hook for the full debt. The staff at Score Crafters knows the right way to handle these negotiations on your behalf.
Occasionally some creditors will not follow through on updating your credit report to show that you have paid off a debt that was sent to collections. This is why it is important to keep all records of communications and payments – and why you should regularly monitor your credit report. If you find it has not removed in a timely manner, you can dispute the entry on your credit report and provide the credit bureau with a copy of receipts and records of your communication.
You cannot undo the past, but you can improve your financial future by avoiding new debt collection entries on your credit report. Newer entries hurt your credit score more than older ones. So if you are experiencing financial challenges, do not avoid calls from creditors: talk with them and try to work out a manageable payment plan that will prevent them from sending your account to a debt collection agency.
Call Score Crafters today and schedule your consultation. We can help you to get your credit score moving in the right direction: up.