To put things into superhero terms; collections are basically the sworn nemesis of credit. In fact, even a single item marked “past-due” on your report could totally slash your score. So what’s a consumer to do? Here are three ways to conquer collections and elevate your creditworthiness to hero status:
1.) Resolve your most recent debt, first.
Depending on the state you live in, the statute of limitations for any unpaid item to remain on your credit report can be anywhere from 7 to 10 years or more. If you have the financial means to start resolving debt in collections, start at the top and work your way down. In most cases, resolving debt less than two years old will likely have a greater score impact than paying off older items.
2.) Prioritize items you can fully resolve.
Anytime you pick up the phone or communicate with a debt collection agency, you run the risk of extending the time frame they are legally allowed to contact you. In fact, unresolved dialogue such as this may also prolong the amount of time the item at stake can stay on your report. With that said, if you choose to correspond with a debt collector, be sure you are ready to resolve the debt owed. If you’re looking to improve your credit, it’s best to take care of the most recent debt you can pay off in full before you tackle items that you can only make a single, non-resolvable payment on.
3.) Negotiate a payment in exchange for removal agreement.
Before you make a new transaction with a debt collector, try to negotiate a payment in exchange for removal plan. Here’s the secret: it may be possible to get a deal on your remaining debt!
“Collection agencies typically purchase debt for crumbs in comparison to the original amount owed; therefore offering as little as 80% or less of the remaining balance due could still lead to a deal.” – Adam Johnson, Director of Operations at ScoreShuttle
First, calculate exactly how much money you can realistically afford to pay. Then, reach out to the debt collector to negotiate a payoff amount they are willing to accept. Once you have a deal, make sure to get it in writing prior to making any money moves. You may have to speak to a manager for this one, but it’s crucial to your credit that you receive documentation stating that once you pay the negotiated amount, the collection agency will remove the item from your report. A statement such as this can help to ensure that your good payment – doesn’t go unnoticed from a credit standpoint.
Following the tips above can give you a major upper hand in conquering collections – however, nothing is flawless. For best credit results, give us a call at (858) 866-9928 or sign into ScoreShuttle to review your report now. Any item over the statute of limitations – or, an account that has been resolved and not removed (per your written agreement) could be counted as a derogatory and may require additional action via ScoreShuttle’s automated dispute software to get removed.