Credit Repair and Debt Collection
Collection agencies work by working on behalf of a company or buying debt from another company. They then call and contact the people who are in debt in an attempt to collect. If you don’t pay your debt at this time, then the collection company or your original creditor can put a note in your credit report that you’ve been sent to collections. This can have a huge negative impact on your credit history and make it harder to obtain favorable rates on loans and credit in the future. Moreover, a collection notice can lower your credit score to the point that you can’t even qualify for loans or credit, even at very high rates of interest.
What are the Impacts of Debt Collection?
Debt collection affects your credit in a number of ways. First, it shows that you aren’t a reliable borrower. Lenders use this information to make determinations about your creditworthiness. Having a collections account on your credit history can lower your score and make other lenders unlikely to see your loan or credit as a good investment.
Additionally, debt collection can create serious hassles for your life. Debt collection companies are notorious for constantly calling consumers to get them to pay their debts. They send frequent letters and may contact your references from your original application, causing shame and embarrassment. Debt collectors have also been known to call an individual’s place of employment, which can get them in trouble with their boss or supervisor.
Finally, debt collection agencies sometimes take extreme measures when it comes to collecting debt. This can include the repossession of property if the loan or credit was used to obtain something they can take back. Debt collection companies may also put a lien on your house or property. This can make it hard to sell the property. Moreover, even if you do sell the property, the creditor gets to take what they’re owed before you see any money from the sale. This can leave people in a precarious situation. Debt collection agencies may also attempt to garnish your wages, so your employer will have to pay the collection agency a portion of each of your paychecks before you get any money. As a result, you may find yourself even further in debt, as you won’t have the income you were counting on to pay your bills.
What is Credit Repair?
Credit repair is a process of cleaning up your credit history so that your credit score improves. Credit repair specialists have many different tactics they can use to help improve your credit. It’s always best to speak with a credit repair expert and get an individualized assessment of your particular situation before you take any credit repair efforts.
Credit repair companies can challenge inaccurate and harmful statements on your credit report to get them removed. Moreover, credit repair experts can request verification of any debts that are listed on your credit report. If a company is not able to prove 100% that you owe the money in question, then the debt or credit report entry must be removed from your report.
How Can Credit Repair Help with Debt Collection?
There are several ways that credit repair companies can help with debt collection. Credit repair can help you if you were sent to debt collection in the past, as well as if you are currently dealing with calls from debt collectors.
If you were sent to debt collections in the past, then credit repair agencies have a few strategies to help remove the information from your record. One of the most commonly used methods is called a letter of goodwill. In this process, the credit repair company asks the collection agency to remove the information from your report. This strategy is usually successful if you’ve paid off your bill or have been making regular, on-time payments on your bill for 6 months or more. A letter of goodwill is a great way to boost your credit score because the company essentially agrees that you are a better borrower than your records indicate, and then act to have the information removed.
In addition to letters of goodwill, credit repair companies can also use disputes and verification requests as explained above. These challenges are effective because they place the burden for keeping the information on your credit history squarely on the debt collection agency. Many debt collectors either don’t have the appropriate records or aren’t willing to invest the time to deal with the challenge, resulting in a better credit score for you.
If you’re currently dealing with a collection agency, then credit repair services are one of your best options. Some credit repair companies will contact your debt collectors and negotiate with them on your behalf. Moreover, credit repair companies can also provide you with the information you need to ensure the company trying to collect on your debts is operating within the law. There are strict guidelines for how a company can collect debt. Furthermore, there are serious penalties for trying to collect debt in abusive ways. If your debt collection agency is calling you several times a day, calling at odd hours, or making threats to you regarding your debt, then you may have grounds for a legal challenge.
As you can see, credit repair companies are some of the best allies you have when it comes to resolving debt collection issues. It doesn’t matter if you were in debt collection five years ago, or are dealing with debt collectors now. Credit repair services have the tools you need to resolve any issues with debt collectors in a safe and legal manner, while offering you the best financial future possible.
Sean brings a decade worth of experience in credit repair to our company. Sean started his career working in an accounting department for a major credit card company. This was a natural fit, given his bachelor’s and master’s degrees in accounting.