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[C794]Collection Agency Credit Reporting

by Michael Demarkks, Mic

Credit Ratings. Everyone is talking about them and they are a very important aspect of every adult's life. But what are they exactly, and how are they determined? It all starts with a credit card, checking account, or bank loan. Once you get any of these, the business which gave them to you reports information regarding the loan (such as your payment history, the amount, if it's in good standing, etc) to a credit agency. The agency then makes a credit report for you, which can be accessed by other businesses (and yourself as well). Your credit rating is determined based on this credit report. Any bad marks on your credit report will stay with you for 7 years, affecting all aspects of your financial life.

A bad mark on your credit report usually starts out as late or missed payments to the creditor. Perhaps you've missed a credit card payment or you can't make your mortgage payments. Eventually the creditor will decide that there is such a small chance that they'll get you to pay your loan, they will sell it to a collections agency. The collections agency can get defaulted accounts for a small fraction of the actual value. In return the creditor is able to write off the money lost. If this happens, the creditor will let the credit report agency know and the credit report will get the lowest possible score. This score can stay with you 7 years!

If this has happened to you, there are things you can do to help the situation. First, if a collections agent has contacted you, call the creditor right away. Discuss ways to pay your debt with them directly, not through the collections agency. If you somehow pay the debt immediately, they will often be willing to remove the bad mark from your credit report, saving your credit rating!

If the creditor won't do this for you or you can't repay the debt to them, then you'll have to work with the collection agency. Take your time to think about all of the options available to you before you make your next decision. At this stage the mark on your credit report can't get any worse, so you have some time to think. Collection agencies are aggressive and will contact you repeatedly, demanding you pay your debt in full or face them in court.

Don't forget that the collection agency most likely got your account for half of what it really was, so if you pay more than this they will make a profit. Offer to pay less than the full amount immediately. Often the collection agency will agree to avoid a long, drawn out process.

Let's recap what we've discussed. If you need to quickly repair your credit, first attempt to pay the creditor back directly. If this isn't possible, then offer the collection agency a full payment of less than the full debt amount. If this doesn't work, only pay the full amount if absolutely necessary.

Before you engage in debt collection practices for your collection agency or for your company, you have to familiarize yourself with what is considered to be permissible collection agency practices. Collection agencies actually inspire fear on an erring debtor and this helps collectors fulfill their job. But it would not be wise to lose this advantage if the debtor finds cause to sue you instead because of your unfair collection practices.

Your collection agency or your company's collections department should stay within the acceptable means of contacting your debtors. You should try to contact your debtors through the post, telephone, telegram or facsimile. The most popular mode is the telephone.

There are certain rules about contacting your debtors. There are laws that prohibit collection calls outside of business hours and late at night. You can only call your debtors from 8 am to 9 pm. If you call outside these hours, your debtors can complain. You can call the debtors at their place of work unless it has been explicitly prohibited by your debtors' employer. And every time a call is made, it must be kept professional and to the point, without threats and obscene language.

Credit collection agencies' collectors have been known to contact other people when they cannot find the debtors themselves. This is an acceptable practice. However, these calls cannot be for the purpose of passing on the responsibility to uninvolved parties but only to find the whereabouts of the debtors. You can only contact a third party once and you cannot harass him to reveal what he knows. You are not also allowed to reveal that you are calling to collect a debt and you certainly cannot reveal the particulars of the debt.

In the course of your collection and information gathering activities, remember that you may never misrepresent yourself. You must always introduce who you are and must not assume a position that you are not actually holding, like a tax collector or a federal agent. Just keep to the straight and narrow in your collection activities and you will have no cause to lose money to costly litigations.

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Both Michael Demarkks & Tristan Andrews are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Michael Demarkks has sinced written about articles on various topics from Credit Repair Companies, Credit Counseling and Collection Agencies. Credit-Repair-Review.com offers free online and credit repa. Michael Demarkks's top article generates over 9900 views. to your Favourites.

Tristan Andrews has sinced written about articles on various topics from Pets, Education and Collection Agencies. Tristan Andrews writes useful articles about . Discover and explore the world of debt collections. Find out how using. Tristan Andrews's top article generates over 673000 views. to your Favourites.