How often do you find yourself saying: "I wish I knew how to
learn more about this topic"
Well, we were listening! And this article is the result. Enjoy.
Credit ratings are based on your credit report. When banks,
credit card companies, or any other business loans money to you,
they report to an agency your status in terms of making your
payments on time, etc. . . The agency then compiles this
information into a credit report, which is the ultimate
gatekeeper to your credit rating. Negative marks on your credit
rating will stay there for 7 years, preventing you from getting
most kinds of loans.
When you begin to lapse in payments to a creditor, whether it be
loan payments or credit card or financing payments, the creditor
will go though various steps in an attempt to receive payment.
After a (usually long) serious of warnings, the creditor will
eventually sell your debt to a collections company. When a
creditor does this, they are effectively "writing the loan off"
as they generally sell the debt to a collection agent at a heavy
discount. Basically, the creditor has decided that their chances
of recovering the loan are small enough that they are willing to
lose as much as half of its value in order to stop pursuing it.
When this happens the creditor will inform the credit reporting
agency, and you will be left with the lowest possible mark on
your credit report, which will affect your rating for up to 7
years.
A crucial step to credit repair is take steps to avoid this
"writing off" of your debt. You should act as soon as possible
after being contacted by a collection agent. The first thing you
should do is contact your creditor - not the collections company
- and see if you can arrange to clear the debt with them. In
many cases, if you agree to repay the debt immediately to the
creditor, they will remove the "gone to collection" mark from
your credit rating - essential to quick credit repair.
Sidenote: Hope you're finding this useful? I have always been
curious about this matter. And when I found very little quality
information about it, I decided to share a part of what I've
learned about it - which is why this article came to be written.
Read on.
If your creditor is unwilling to do this, you're stuck with the
collection agency. In terms of credit repair, keep in mind that
the mark on your credit rating can't get any worse at this point
- the debt is already gone to collection - so take time to
consider all of your options. Usually, the collection agent will
contact you in an aggressive manner demanding immediate and full
payment of the debt, and imply that they will take you to court
if this doesn't happen.
It is to your advantage in this situation to understand that the
collection company has likely bought your debt at something
close to half its value, so any payment higher than that will
result in a profit for them. Try and offer to pay less than the
full value of your debt immediately. In most cases the
collection agent will be motivated to close your file as soon as
possible to avoid the process getting dragged out. They will
usually be willing to accept a quick payment at a discount so
they can move on..
In order to achieve credit repair as quickly as possible, always
attempt to pay your creditor rather than the collection agent
when your debt has gone to collection. If that fails, offer the
collection agent a lower figure than the full loan amount. Full
payment to a collection agent should only be offered as a last
resort.
What you've just read is only the beginning of a fascinating
journey into the subject. There are many more useful resources
on this site - I invite you to spend some time exploring them
and learning even more.
Free Credit Repair
Guide
Credit Card
Approvals
About the author:
James Mahony is the founder of
Free Credit Repair
Guide - A Guide Free Guide to Credit Repair and
Credit Card
Approvals
