Typically collection accounts result from unpaid bills such as cable, mobile phone, utilities, rent, or medical procedures. Collection agencies will purchase the unpaid bill, often for only a small fraction of the original amount owed, and gain the right to collect that money from the consumer.
Important things to know about collection accounts
Important things to know about collection accounts
- Collection accounts can only be reported on your credit report for 7 years from the date of the original amount owed.
- If you are close to the 7 year mark, you may want to consider letting the account fall off your credit report.
- Collection agencies are often willing to accept far less than the amount appearing on your credit report.
- You should always try to negotiate the complete removal of the collection account from your credit report as a requirement of payment.
- Regardless of what you negotiate with the collection agency, make sure that you get a written agreement prior to making any payment.
- Avoid settlements for partial payment if that partial payment does not result in complete removal from your credit report. A payment can cause the collection agency to update the reporting on the credit report and that can actually harm your credit.
- Collection accounts are often reported inaccurately on consumer credit reports.
- You can dispute collection accounts with the credit bureau that is reporting the account if you believe it to be inaccurate or you don't believe they have to proper documentation to substantiate that you owe this debt
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