Avoiding Collection Accounts On Your Credit Report
Even when you are applying for a credit card, it is standard practice that your credit history is scrutinized before approving the application.
There are several reasons why you would be denied or rejected when you apply for a loan.
Among the most common reasons are delinquencies, charge offs and collection accounts.
You may have had heard of delinquencies and charge-offs but collection accounts maybe new to you.
If you are not that familiar with them, then you should know a thing or two.
Collection accounts are actually your unpaid debts that were sold to collection agencies by your old creditors for a smaller amount than the original.
The reason is mainly because of tax issues.
Your old collectors can now consider these old debts as losses instead of profit and be free from paying taxes that come with them.
Now, these collection agencies will try to use all necessary means to collect these collection accounts.
Some employ scare tactics like threats of lawsuits while others simply harass the owners of these accounts.
They have the resources to call you several times a day as well as demand payment in writing.
It is really a harrowing time for some of the owners of these collection accounts and if you can, you should avoid such situation.
In addition, you will have to suffer from seven years of bad credit reports because of these collection accounts.
Avoiding the inconveniences of these collection accounts is not at all difficult.
Before an unpaid debt is sold to a collection agency, your creditor will usually collect these unpaid debts themselves for up to 120 days.
This means that you have at maximum four months to get your finances in order and work out a repayment plan that is realistic to you and at the same time acceptable to your creditor.
You would be surprised at how many creditors are willing to compromise on payments.
Why not? They will end up gaining back all their money instead of just a portion of it.
Of course, you would not be in this position if you have settled your debts before they were reported to the credit bureau.
To avoid all these inconveniences, you must always try to pay all your bills in full and make sure you do not miss any payments.
If you are bad in keeping payment transactions, you should start changing that now.
You might find yourself in trouble if there are discrepancies with some records on your credit reports and you have no proof that you have paid these debts.
You should also assess whether or not you are living within your means and not living on credit.
If you continue to do so, your financial life will be a lot worse with a bad credit report.
There are several reasons why you would be denied or rejected when you apply for a loan.
Among the most common reasons are delinquencies, charge offs and collection accounts.
You may have had heard of delinquencies and charge-offs but collection accounts maybe new to you.
If you are not that familiar with them, then you should know a thing or two.
Collection accounts are actually your unpaid debts that were sold to collection agencies by your old creditors for a smaller amount than the original.
The reason is mainly because of tax issues.
Your old collectors can now consider these old debts as losses instead of profit and be free from paying taxes that come with them.
Now, these collection agencies will try to use all necessary means to collect these collection accounts.
Some employ scare tactics like threats of lawsuits while others simply harass the owners of these accounts.
They have the resources to call you several times a day as well as demand payment in writing.
It is really a harrowing time for some of the owners of these collection accounts and if you can, you should avoid such situation.
In addition, you will have to suffer from seven years of bad credit reports because of these collection accounts.
Avoiding the inconveniences of these collection accounts is not at all difficult.
Before an unpaid debt is sold to a collection agency, your creditor will usually collect these unpaid debts themselves for up to 120 days.
This means that you have at maximum four months to get your finances in order and work out a repayment plan that is realistic to you and at the same time acceptable to your creditor.
You would be surprised at how many creditors are willing to compromise on payments.
Why not? They will end up gaining back all their money instead of just a portion of it.
Of course, you would not be in this position if you have settled your debts before they were reported to the credit bureau.
To avoid all these inconveniences, you must always try to pay all your bills in full and make sure you do not miss any payments.
If you are bad in keeping payment transactions, you should start changing that now.
You might find yourself in trouble if there are discrepancies with some records on your credit reports and you have no proof that you have paid these debts.
You should also assess whether or not you are living within your means and not living on credit.
If you continue to do so, your financial life will be a lot worse with a bad credit report.
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