Amanda Amezcua Profile Picture
Staff Writer at Debt Reduction Services

Consumers should be frequently checking their credit report for past debtWhat Collections Accounts Are Hiding in Your Credit Report?

If you are like any other person, you can probably recall an afternoon arriving home completely exhausted, collecting a pile of mail on your way in and without a thought setting it on a counter or placing it in an organizer only to have those letters misplaced just days later. Perhaps you’ve left one nagging bill in sight to remind yourself to pay it, but distractions have demanded attention and a couple weeks go by before you ever get around to it. If you’re really shamelessly honest, you might have a bill or two—the labor intensive kind that requires you to submit a payment through the mail—that you can’t with certainty claim to have paid at all. Oops! What’s the worst that can happen? Unfortunately, this little mistake can cause quite a headache in the future.

The importance of checking a credit report

With companies popping up left and right offering access to your credit report for a small fee or in exchange for subscribing, many consumers don’t realize that this is a right they’ve been guaranteed, free of charge, through the Fair Credit Reporting Act.

You may already understand that checking your report is an important step when preparing to buy a car, home, or when taking out a substantial loan since the notations there will play a significant role in determining how able you are to repay money borrowed.

This is a praiseworthy practice; however, it is equally important and beneficial to keep a constant eye on your credit report throughout the year. Financial educators even suggest doing so every few months. It is in fact, one of the first steps our credit counselors advise our clients to take when helping them clean up their finances. After all, it’s difficult to improve your financial situation if you are not sure what is negatively impacting it.

What to look for

That future headache we mentioned earlier? It is here and now. Unpaid bills no matter their nature, may seem to disappear for some time, but will almost always resurface; if it does not return in the form of a collection agency pestering you to pay, then at very least it will appear as a notation of an unpaid debt that creditors and employers find unappealing when it comes to applicants. It could prevent you from being approved for a new line of credit or from landing the job you hoped to get.

If you have seen a 5-10% drop in your credit score, or feel your ability to qualify for credit has suffered, this may also be the result of a debt on your credit report that you weren’t aware was there. Since around 1 in 3 Americans have debt in collections, it is certainly a possibility you could be suffering from the same.

You may discover credit card fraud on your credit reportAs you review your credit report, along with old debts in collections, you should also look for errors and suspicious activity. Studies conducted between 2012 and 2016 confirmed that 20-25% of consumers found inaccurate information in their credit report. This may include a listing of debts not actually owed, lines of credit never opened, balances marked as past due despite having been paid on time, or notations that should have already been removed.

Additionally, activities that indicate identity theft can be identified when scouring your credit report and with proper dispute can lessen the extent of the negative impact on your finances.

How to dispute credit report errors

Luckily, those injustices on your credit report with a little effort can be cleared up, allowing your finances to work their way back to being healthy. To accomplish this, follow the step by step guide supplied by the Federal Trade Commission.

Be prepared to contact the credit reporting company and those that provided information about you to the credit reporting company. It is highly recommended that you keep documentation of all communication.

Parties involved in the investigation of your disputed error are required to reach a resolution within 30 days and send you information regarding the decision. Notations can be removed or changed to correct inaccurate statements and you will be able to move forward with a healthier credit report.

Why you should pay old collections debt

In checking your credit report, you may have come across a debt you forgot you had. An unpaid internet bill or even a lost library book can result in a debt being sent to collections which causes it to appear in your history.

This notation may seem insignificant being that it is old and maybe amounts to less than a couple hundred dollars, but resolving the unpaid debt is necessary and when it comes to improving your finances and ability to borrow, every little bit helps.

Paying any uncovered debt in a timely manner will not only prevent collection agencies or companies from suing you for court-ordered wage garnishments or the account balance, it will also cause an unpaid debt to be identified as paid in full. Even though this debt remains listed as part of your history for a total of 7 years, lenders are more likely to work with individuals whose collections account have been resolved and are in good standing.

Taking the time to monitor and maintain your credit report will ensure your identity is protected, your relationships with creditors are recorded accurately, and that all past debt has been appropriately settled. With these things in place, you will be on your way to achieving your most desired financial goals.

Wishes for success,

Amanda Amezcua

Staff Writer

Debt Reduction Services, Inc.

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Do You Have Questions About or Suggestions on Checking A Credit Report?

We check our articles and blog posts for new comments and make it a priority to respond quickly.

If you’d like more information on accessing and understanding your credit history, fixing inaccurate credit notations, or have tips to share with others, please feel free to comment below and we’ll answer right away!

  1. Jan

    Hi, On a unpaid debt. Is it legal to ask the debt collector to remove the debt from my credit report once I have paid it off? Is it possible to negotiate this?

    • Amanda Amezcua

      Hi Jan,
      Thank you for reading and for submitting a comment! In regards to your question, it is legal to ask a debt collector to remove a debt from your credit report once you have paid it off. I’m not sure what the statistics of success are in negotiating that term, but the answer is always “no” to those that never ask. That being said, there are some things to know that I and our team of counselors feel would help increase your chances of success.

      First, there are two ways to go about accomplishing what you want. You can negotiate an agreement with the debt collection company that they will communicate with the credit reporting bureaus asking them to change the way your debt has been reported upon payment in full. If you go this route, make sure you have plenty of documentation. At very least have the terms laid out in an agreement and signed by a representative of both parties. You may also want to send a letter (keeping a copy for yourself) verifying and instructing that your payment is to be processed only if the company agrees to carry out your terms. It may also be wise to request some evidence that your agreement has been fulfilled such as a copy of a correspondence to the credit reporting bureaus.

      The second way to go about removing the debt from your credit report is to request it from the credit reporting bureaus themselves in the form of a dispute (find out more about that on the FTC website). In order to ensure the debt collector will not contest your dispute, you can have them sign an agreement stating such.
      If you are able to pay in full, this should be motivation enough for the debt collector to accept your proposal whichever way you choose to pursue this.

      We wish you success and please don’t hesitate to ask if you have additional questions!

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