Factors That Affect Your Credit Score

Collection Accounts:

Collection Accounts are thirty five percent of a consumers credit score.  The type of debts that a consumer will see in this section is accounts that are “closed accounts”, due to non-payments.  These debts are usually sold to third party collection agencies, or transferred to the collection department within the creditors facility.  

Once a debt is reporting with the bureaus as a collection, the consumers credit score starts to decrease on a monthly basis.  Remember, every thirty days your score will either increase or decrease.  This will affect your credit for the first two years from the date it was filed.  The truth to this matter is that a consumers credit score starts to decrease once a payment is either not made, or late with an active or open account.  At this point a consumer will get notices in the mail from their creditors stating that these accounts are past due, and try to negotiate a payment plan. 

There are options if you are having financial difficulty at that time.  There are two options, you can either enroll in a “Hardship Program”, or negotiate a payment plan.  If a payment is no longer made from ninety days up to one hundred and forty days, then the creditor will close the account and will become a “charge off account”.  After this becomes a charge off account, the creditor will sell this account to a third party collection agency, or submit this account to their collection department.

Once your debt is sold or transferred to a collection agency, or department, you will have two options.  The first option is negotiating a settlement.  Keep in mind that you can always negotiate a settlement.  Never pay full price for this type of debt, always settle for fifty percent or less of the balance due. If you decide to go this route then make sure that financially you are able to make a settlement the day you call that creditor.  Always get everything in writing, before making your final settlement payment.

Once the settlement is agreed upon you and the collection agency, request for another letter stating the account was “Settled in Full”, though it was a partial settlement or settled for less.  The reason for this is to avoid another collection agency calling you about the remaining balance that was not paid.  Believe me this happens all the time, so make sure that you get a letter faxed to you stating that they accepted the settlement offer, then another letter stating that the account was “Settled in Full”.

The Credit Repair Center is written by Wanda Acevedo.  For more information please contact Wanda at: Ofc: (704) 877-8739.