How Long Will A Negative Mark Remain On Your Credit Score? Part One

Your credit score. It could be your worst nightmare, or a dream come true. But most of the time it’s kind of like that rude mother in law coming to pay you a visit at your house. You are aware that she is coming to stay, and you are not looking forward to it, but you are too nervous to ask or even consider how long she might be paying you that visit. OK, so that analogy wasn’t that great. But anyway, read on to see just how long negative marks will stay on your credit history.

First, there are mistakes on your credit report. This happens when something that you didn’t do, or an account that doesn’t belong to you shows up on your score when you are looking it over. These will be removed immediately. Looking for and removing mistakes on your credit report are a crucial reason why we should check our credit scores at least once a year. If you do find a mistake, or a negative account that isn’t yours, get in touch with the credit reporting agency and the creditor too. Within 180 days you should be able to have that negative mark taken off your record.

Whenever a creditor pulls your credit report (which means that they ask to see it), something called a hard inquiry will be reported on your record. If it is only an occasional hard inquiry this most likely won’t hurt. However, if there are a large amount of inquiries recorded on your record, this will generally make prospective creditors think that you need the cash and you need it fast.

If a potential lender looks at your credit score and sees that they are the tenth financial institution that you have asked for credit, they will have cause to be suspicious. Even though the credit reporting gods will concede that people shop around for loans and credit, and say you have, two weeks where you have a lot of inquiries, they will take that into consideration and not penalize you too much, the bottom line is that the more hard inquiries that show up on your report, the lower your score will be. Hard inquiries can stay on your credit report for up to two years.

Not all inquiries will negatively affect your credit score. A soft inquiry is when you check on your own credit score, or when potential creditors check your credit to see if they want to make you any unsolicited offers of credit. Actually, lenders see this as a good sign. If you are regularly checking your credit report, you are most likely fiscally responsible. To be continued in part two…

Mallory Megan works for Rapid Recovery Solution and writes articles about new york collection agencies. Free reprint avaialable from: How Long Will A Negative Mark Remain On Your Credit Score? Part One.

When You Owe Too Much Money And Just Can’t Pay

Debt can be an exhausting problem that weighs you down and affects your personal life greatly. But what if you have exhausted all of your resources and still can’t free up enough money to start repaying your debts in a big way? You still have choices. Perhaps it is time to think about the big things in your life- private schools, your home, and your cars. Are these things truly necessary? Another choice you have is to go through your home and your things and determine there is anything of value to sell. You can go after more money at your current job, or by taking on a second one. And there are still other options yet. Credit counseling and bankruptcy are always available, but you are not there yet, so for now, take a deep breath and determine what you can accomplish on your own.

If you are a parent with kids that go to private school, think about moving them from private to public. For mothers and fathers, the notion of moving their children from one school to another can be overwhelming. If this is not something that you as a parent are willing to do, you can always see about applying for financial assistance from your current school.

It is also a possibility that your living environment is sabotaging your capacity to make ends meet. Just last decade, we were fearful that if we didn’t buy at the very moment that we would be priced out of the only neighborhood we desired to live in. It’s a hard decision, but it very well may be that selling your home is a solution that you have to consider. While it is a conventional pearl of wisdom that your house is the asset you’ll retire on, and the most valuable asset in your portfolio, unless you can afford to make the payments, it’s also going to be the one that can be your downfall. Trading down – switching a larger house for something more manageable and less expensive can be an option, but you also may need to consider renting for a while. Bear in mind that if you can keep the cost of moving low, renting will save you the cost of homeowner’s insurance. (Renter’s insurance is much cheaper.) Other things you will save on include yard care, and commuting costs if you can find the right location to rent from.

If you can wrap your head around it, there is probably another, less expensive way for you to get back and forth to work each day. Think about it. Could you get by without a car for a bit? Not only would it save you the expenses of paying for the car itself, and it’s upkeep (oil changes, repairs etc) but factor in gasoline, auto insurance and parking. And if you feel as though you cannot go without a car, what about trading in your expensive car for one that runs just fine but is used?

Many times, simply thinking outside of the box is all that it takes to get yourself out of a situation that you find is difficult. If you take a calm approach to your situation with an open mind, you may find that the solution comes easier to you than you ever thought possible.

Mallory Megan works for Rapid Recovery Solution and writes articles about nationwide collection agencies Get a totally unique version of this article from our article submission service

What Is A Third Party Collection Agency?

The phrase collection agency is commonly applied to third-party agencies, named that because they were not a party to the original contract. The creditor designates accounts directly to such an agency on a contingency-fee basis, which commonly initially costs nothing at first to the creditor or merchant, except for the cost of communications. This on the other hand is dependent on the individual service level agreement that exists between the creditor and the collection agency.

The agency will accordingly obtain a percentage of the debt that is successfully collected; frequently known in the industry as the “Pot Fee” or potential fee upon successful collection. This does not accordingly have to be upon collection of the full balance and oftentimes this fee is paid by the creditor if they scratch out collection efforts before the debt is collected. The collection agency makes money only if money is collected from the debtor. Depending on the kind of debt the fee ranges from 10% to 50%.

A couple agencies offer a flat fee, typically $10.00, “pre-collection” or “soft collection” service. The service sends a chain of increasingly compelling letters, usually ten days apart, instructing debtors to pay the amount owed directly to the creditor or risk a collection action and negative credit report. Depending on the stipulations of the contract, these accounts may change to “hard collection” status at the agency’s regular rates if the debtor does not answer back.

In the United States, consumer third-party agencies are governed by the Fair Debt Collection Practices Act of 1977 (FDCPA). This federal law is governed by the Federal Trade Commission or FTC. This act limits the hours during which the agency is permitted to contact the debtor and prevents communication of the debt to a third party. It also prohibits false, deceptive or misleading representations, and prohibits the agency from making threats of actions the agency cannot lawfully or does not intend to take.

In the United Kingdom third party collection agencies that pursue debts regulated by the Consumer Credit Act must themselves hold a Consumer Credit Licence; this is a requirement under the Consumer Credit Act 1974.

Licenses are distributed and regulated by the Office of Fair Trading a government body which protects consumers from dishonest traders. In order to retain their license third party agencies must work within the framework outlined within the 2003 fair debt collection guidance.

Rapid Recovery Solution is a medical debt collection agency.

What Is The Deal With Collection Companies? Pt.1

What is the deal with debt collection companies?

Two possibilities exist.

A few creditors will try to deter a debtor by utilizing a separate company name, address, and phone number for their internal collection departments, with the purpose of giving the impression of an “outside” agency. This strategy is should only be used when the debt is recent (under six months past due.)

However, most collections activity is performed by a third-party collection company, which are separate from the original creditors, and “work” debts on behalf of various lenders. They may also buy bad debts which have been designated as charge-offs by the original creditor.

This article will spotlight 3rd party collection companies

How exactly does a collections agency get paid?

Third-party debt collection agencies typically work on commission, this is where they receive a percentage of the amount that they collect. Individual collectors are often paid a low base wage plus commissions based on their personal performance.

A number of companies buy huge groups of charged-off bad debts for a small percentage of the face value (amount owed.) After a debt is sold, the debtor now owes the full amount to the purchaser. Since the chances of recovery decrease substantially with time, an agency might only pay 1% – 5% of face value. The agencies’ profits come from the difference between the purchase price and the amounts that are eventually collected.

How do debt collection agencies work?

The main tools of a debt collection agency are telephone calls and letters.

What is the deal with collection letters?

The 1st demand letter must state that the recipient has the right to dispute the validity of the debt or request verification of the debt (in writing). By law the agency must send some confirmation after verifying it with the original creditor. Demand letters should additionally have the statement that they come from a debt collector, and that any information obtained will be used for the purpose of collecting said debt. Collectors are not permitted to print anything on the outside of the envelope which may indicate or suggest that this is a collection attempt. The return address label must also be discreet, so many companies will just use their company’s initials, or some other nondescript name.

Rapid Recovery Solution is a New York debt collection company. Click here to get your own unique version of this article with free reprint rights.

When Should I Call In A Credit Collection Agency?

You should call in a credit collection agency sooner rather than later. The longer you wait to begin the collection process on past due accounts, the less of a chance you’ll have at recovering your money.

The day after an account becomes overdue, you should place a polite phone call to the customer who owes you money. If that doesn’t work, you may want to send a few reminder letters yourself, or you may want to go directly to a credit collection agency. Base your decision on how much money is owed to you and the history of your relationship with the customer. If it’s the first time you are doing business with them, you’ll want to call in a credit collection agency sooner than you would with a 10-year old customer with a solid credit history.

Most companies call in a credit collection agency once a debt is 60 days to 90 days past due. If you wait much longer than 90 days to begin recovering unpaid receivables, your chance of collecting drops dramatically.

If you discover that your account has gone out of business, find out what type of business it was – a corporation, a partnership, or a proprietorship. If it was a corporation, don’t bother calling for the help of a collection agency. It is doubtful that you, or any one else, will be able to squeeze the last few nickels out of that client. If the company is a partnership or a proprietorship, you may be able to get the individual owners of the company to pay you out of their own pockets.

If you try to recover a debt and cannot, consider that bad debt a tax-deductible item (Tax Code IRC 166, Reg. 1.166). You will be able to deduct the cost of the goods sold (but not paid for) as an ordinary business expense. You can’t deduct any lost profits from the sale, nor can you deduct the money owed for services rendered.

Rapid Recovery Solution is a New York debt collection company. This and other unique content ‘collections’ articles are available with free reprint rights.