Paid vs Unpaid collections
You forgot to pay a debt. Maybe you didn’t have the money at the time to take care of the debt and hoped after a while it would go away. Chances are that wasn’t the case. Now you find yourself with a collection agency calling and writing you to collect the debt. That means the collection agency was likely hired by the company you owe the money to. Their job isn’t to be your friend; their job is to collect the money you owe and move on. Be careful talking to these people over the phone. Often times they don’t even follow the law that governs them. They will threaten you with lawsuits, wage garnishments, or anything else they think will force you into paying the debt.
Another thing collection agencies do to get you to pay is report the collection account to the credit bureaus. They do this to knock down your credit score – which will happen – sometimes over 100 points. Most consumers see this and want to get rid of it as soon as possible, often thinking that paying the collection in full will help their credit score return to where it was. Wrong. A paid collection negatively affects your credit score the same as an unpaid collection. This negative mark will stick with you for up to 7 years, affecting your approval odds as well as interest rates on lines of credit you are approved for.
Collections can happen to anyone, whether you’re already managing your credit responsibly or have hit hard times financially.
If you have any questions or would like a free credit evaluation, contact the credit experts at Credit Solutions Plus today. We are here to help repair your past so you can focus on building your future.