
#money #finance #debts #bad debt - Debt Collection Agency
How Collections End Up On Your Credit Report?
Your credit report contains information about your credit accounts, e.g. credit cards, loans, etc. Most, if not all, of your creditors send monthly updates about your payment status to your credit report.
When an account is sent to a collection agency, either the original creditor or the collector updates the account on your credit report with a “collection” status. The creditor doesn’t have to tell you that your account is being sent to collections. However, the debt collector does have to notify you that they are collecting the debt before they can take any action.
What Does It Mean For Your Credit?
A debt collection is one of the worst types of credit report accounts. A collection account shows that you have been seriously delinquent on an account. Your credit score will drop if a collection appears on your report. You may be denied for credit cards and loans in the future, especially if the collection is recent or remains unpaid or both.
Debt collection accounts can stay on your credit report for up to seven years. You can lessen the effects of a collection on your credit score by paying it off. As time passes, the collection account will have a less significant impact on your credit. Continuing to pay all your other bills on time will also help your credit score recuperate from a debt collection.
Article Source: LaToya Irby – www.about.com
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