Remove collections from credit report Q & A

Q:
Hi Mike,
I disputed my credit report through your site. I had some collections on my credit report that are over 7 years old. My question is how long does it normally take to remove the collection that is incorrect? This collection on my credit report is 9 years old, and is still reporting with Equifax credit bureau. This is very aggravating to me and I feel like the credit bureaus don’t stay on top of this stuff like they should. I just want it removed; I believe it is dragging down my credit score.

Shawn Matters

A:
Hi Shawn,
This is a common issue with the credit bureaus. Yes, if there is a collection reporting on your credit report it is dragging down your credit score. Typically after you dispute the inaccuracy, the credit bureaus will remove it in about 30 days. Make sure you only dispute it once, because if you dispute it twice the credit bureaus will put you back in the 30 day window again from the date of dispute. So in essence it could take 60 days to resolve by disputing it twice.

Mike Clover
CreditScoreQuick.com
Your Resource for free credit score reports, fico scores, loans, credit cards, insurance and identity theft protection and credit repair advice.

Comparing Bankruptcy to Collections

No one wants to run out on a valid debt, but sometimes things happen that make it impossible to make payments. In the best of all worlds, you could go to creditors, explain the situation, and they would let you put off making payments until you got back on your feet.

But while some creditors might be willing to cooperate, given the promise of full payment at a later date, some will not. That leaves you with some tough choices:

• Filing Chapter 7 Bankruptcy
• Filing Chapter 13 Bankruptcy
• Letting your debts go to collection

Prior to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, almost anyone could file Chapter 7 and wipe the slate clean. The bankruptcy put a blot on their credit report and lowered their FICO credit score, but they no longer owed the debt.

Now it’s a bit tougher. If your income is greater than the state median income, your motion to file Chapter 7 will be dismissed and you will have to file Chapter 13. That means you’ll have to repay the debts over time.

A Chapter 7 bankruptcy dissolves all debts that legally qualify for the process – meaning that almost all liabilities are erased. You can’t erase a debt to the IRS – so don’t count on this system to get rid of overdue income taxes.

Chapter 7 filings remain on your credit report for 10 years, so this move is not one to take without due consideration.

Under Chapter 13, you must pay off at least a portion of your debts over time. For 5 years you’ll pay money to a court appointed Trustee, who will disperse the funds to your creditors. This option is usually for people who have a steady income.

Be aware that certain restrictions will apply to your life. You won’t be able to go out and buy a new car, that’s for sure! This stays on your credit report for 7 years.

The third option might be the best in some cases: Letting your debts go to collection.

When your original creditor decides that collecting from you is a lost cause, it will sell your debt to a collection agency for pennies on the dollar. The collection agency will, of course, attempt to get the full balance from you, but you can negotiate a lesser balance agreement. Even when you pay far less than the original debt, the collection agency makes money because they paid so little for the debt.

The future will see fewer people filing Chapter 7, if for no other reason than the income limitations. It should see fewer people overall filing, because of the life restrictions imposed under Chapter 13.

Always pay your debts if you can, but if you can’t, consider letting them go to collection as an alternative to bankruptcy.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Remove collections from my credit report Q & A

Q:
Hi Mike,
I have some collections on my credit report that I would like to remove. I have been told you can remove collections from your credit report by disputing it. Is this true, and if so how long does it take? I really want to get my credit scores higher soon. The company that I will be applying with requires good credit to be hired. Most of my credit issues are old and the result of college.

Julie Wang

A:
Hi Julie,
Collections are typically on your credit report for 7 years from collection date. Just disputing a collection that has not expired is a waste of time. Collections don’t come off your credit report unless it was a mistake on the creditor’s part. If the collection was valid it will remain on your credit report for typically 7 years. Here is good article on how to repair your credit report for free.
CreditScoreQuick.com

How to negotiate credit report collections.

A collection on your credit report is a bad thing period. If you have let some debt go due to the current economic downturn, join the rest of America. Even though it’s tough on your fico scores, there is a solution to fix the issue at hand. Things come up in life that is beyond our control. The FICO score model knows this, so as long as you don’t make a habit of letting debt go to collections you can get back on track fairly quickly. In this article I will discuss exactly what you need to do when your credit report is littered with collections and charge offs.

Step: 1 Negotiate debts owed
Once you have pulled a copy of your free credit report, get an account of the collections and the creditor’s number that is reporting it. Start calling these collections companies and negotiate a payment plan or an agreement to pay off the debt for pennies on the dollar. If you have a $30,000 dollar credit balance its not unusual for them to except $7000 as a settled balance. What ever deal you can negotiate make sure you keep the arrangement in good standing.

Step: 2 Get letters from Collection Company
After you have come to an agreement with the collection company on the phone, ask them to give you a letter to delete from all 3 credit bureaus. This may or may not happen. Typically the collection company will either give you a letter showing you either settled the account for paid it in full. Regardless of what you negotiate, make sure you get that letter. It is not uncommon for these collections company to not report the updated information properly. If it’s not reported properly and you did not get documentation you took care of the account, it’s your word against theirs.

Step 3: Negotiate most recent collections and small balances first
While you are going through the negotiation process with your creditors, make sure you start with the most recent collections first. The reason for this is old collections that are close to 7 years are about to fall off your credit report anyways. So there may not be a need to pay those debts off. Also start with paying off small collection balances first. It’s is less of a hit on your pocket book.

Step 4: Pull a copy of your free credit score report
After you have paid some of your collections off, pull a copy of your free credit reports to see if the collection company has removed the collection or updated with the credit bureaus properly. This process will more than likely need to be done several times through out the year.

IF you have collections that have been on your credit report for more than seven years, you can dispute it. This will get it removed. Go here to dispute on-line for collections that have expired.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Paying off Collections Q & A

Q:
Hello Mike,
I have some questions about collections. I have not pulled my free credit report yet, but I know that I have collections on there. I have had some financial problems in the past due to medical issues. I have read that you should not pay off your collections; it will drop your credit score. The collections I have are about 2 years old. Do you recommend I pay them off, or leave them be? I plan on buying a home within the next year or so.

Leslie Lerner
Denver, Colorado

A:
Hi Leslie,
This is a great question. Collections can be tricky; usually credit repair companies will tell you not to pay off collections. The reason for this is they are obviously in sales, would be my opinion. I have helped people get there credit scores up for years so I could finance them, by having them pay off the most recent collections. When you pay off collections on a credit report it could go two ways. Your credit scores could temporally drop, but most of the time your credit scores will increase. For long term credit repair I recommend always to pay off collections. It is important to ask the collection agency to give you a letter to delete from all 3 credit bureaus. This will remove the collection from your credit record as if it were never there. Some collection agencies will only give you a letter showing paid or settled. It does not hurt to ask though, because sometimes they will give you a letter to delete the history from the credit bureaus.

Mike Clover
CreditScoreQuick.com

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Credit Report affected by un-paid utility bills

Your credit score report can be affect by more than your available credit history. We talk about how credit cards, mortgages, car loans, and any type of loan that reports to all 3 credit bureaus will affect your credit score. We don’t always talk about utility companies and how they can have a negative impact on your credit report. Here are utility companies I like to consider non-creditors. In other words these companies don’t give you a line of credit, they just provide a service.



Utility companies
• Phone companies
• Electric companies
• Security companies
• Cell phone companies
• Water companies
• Gas companies
• Cable companies
• Internet Companies

Let’s assume you are having a tough time currently, and you stop paying your cable bill. The cable company will give you a little time to pay off the debt for service rendered, but will eventually turn that debt over to a collection company. The collection company in return will report that obligation to the 3 credit bureaus wanting their money. This is how it works with any of the companies mention. Once this collection reports to the credit bureaus your credit rating just dropped about 100 points. Utility companies on the other hand don’t help your credit when you are in good standing, but will also hurt your credit score if you don’t pay. Once the collection hits your credit report, and you finally decide to pay off the collection, the collection will be on your credit report for 7 years. 7 years of negative information will be on your credit report. If you don’t pay the collection, the collection company can sell the collection repeatedly to different collection companies which will ultimately drive down your credit score even more.





Pay your bills on-time
If you get behind, call your creditors immediately and work out a payment arrangement with them. They will typically work with you, especially during tough economic times. A creditor or utility company would rather get some form of payment versus nothing. If you don’t pay your bills including utility bills it will affect your credit score report. With lending getting extremely tough currently, your credit scores are more important than ever. If you have credit issues, the banks may look at your credit history as too big of a risk for there portfolio.

Don’t assume if you don’t pay utility it will not affect your credit. Because it will affect your credit, and will not go away until you pay it off. If you are unsure what is on your credit report, get a copy of your free credit score report today.



About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.