3 Ways to Handle Collections

Do you have a collection on your credit report and you are wondering what your options are?

I recently helped a fan on The Credit Guy TV Facebook page on how to negotiate with a collection company. Consumers have a few options for removing or settling a collection;

1. The first and best option is “Pay for Delete” if the consumer is not properly notified of the collection and it was reported to the repositories then they have a legitimate claim to request it to be removed. If the debt is actually theirs. They should pay the debt but when negotiating with the collection companies always get any agreements in writing. Some collectors may say that it is against the law to do that or it is illegal. Those statements are to get you to back off from that request, the reason they don’t want to do that is because if they continually go back to the repository for things that shouldn’t have been reported or were reported incorrectly the repository relationship will become strained and they will not want to take any more information from the collection company.

2. “Settled for less than full balance” the second best option is to negotiate with the collector for settled for less than full balance, that means that the collector will take a partial payment to show that account has been paid and settled. The account may read “settled for less than full balance” at the bottom but that is fine as long as it is being reported as zero balance. The key is to get that collection paid to zero and then no longer reporting active. The reporting date is significant on a collection, it is the most important date. Paying a collection at least right now is never a good, short-term strategy to quickly improve consumers credit scores. When consumers are planning to apply for a loan they should not try to pay off all collections first. Go to a good loan officer and start there. A long-term perspective would include paying off all collections but it could take years to for consumers to reach their credit goals.

3. Just to pay the debt in full not a great option but if it was the consumer’s debt they should probably pay it.
Those are the 3 options if you want more information about how to improve your credit score and get a copy of my new book Transform Your Credit I have just updated the book and it is completely redone It is available on Amazon.

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How to handle collections on credit report
How to handle collections on credit report
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How to handle collections on credit report

If you want to see more videos about credit and credit scoring check these out at www.thecreditguy.tv. If you are a mortgage lender please share this on your Facebook or LinkedIn page. If you have any questions, leave them down below I’d be happy to answer them.

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3 Ways to Handle Collections

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