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For the longest time, debt collectors have been one of the most complained about individuals as only a handful of people or businesses will have positive experiences about them. However, a look at most cases indicates that businesses and individuals do not take the time to learn about debt management or even the debt collectors themselves. As a result, they get caught off-guard leading to the nasty experiences. As a consumer, it is ideal to be on the know so as to protect your business at all times. This article is a short story which seeks to explain what debt collectors are and how they could affect your credit.
What is Debt Collection
Debt collection refers to a unique type of financial account which is typically sent to a third-party debt collector. Basically, it will refer to the companies that collect unpaid debt for others. When you have a debt, the company you owe to could assign your account to a collection agency especially if you miss to make several payments. In most cases, the use of private debt collection agencies is cost effective and that us the main reason debt collectors exist. Different creditors will have varying policies regarding debt collection. Review your credit card so that you get a rough idea on your creditor’s timeline.
What to Expect in a Collection Account
When debt collectors are trying to have you pay your debt, they will typically send you letters, call or even go a step ahead to notify the credit bureaus of the collection account. Some of the collectors will call you at your workplace while others will visit you physically. Be aware that the law allows them to call you between 8 am and 9 pm your local time. As such, they might call severally especially in cases of individuals that dodge phone calls.
A last resort effort by debt collectors when they cannot find you will be to reach out to your friends or relatives. They do this in a bid to ensure that they possess the right contact information.
How Collections End Up on Your Credit Report
Your credit report will have information such as the types of loans or even creditors. When your account is forwarded to a debt collector. The original creditor or the collector will strive to update your credit report with a ‘collection’ status. Your collection account will, therefore, indicate that you have direly become delinquent on your debt and hence your credit score will drop. An individual or even firm risks being denied loans in the future. An accurate debt collection report may stay in your credit report for up to 7 years which is quite long.
With the above insights, you should be able to prepare well in the event that you are in a debt. However, remember that your credit report will only change for the better once you start making payments.
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Published on July 04, 2019
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