Collection Agencies and your credit file

Collection Agencies are a major source of inaccurate information.  The two most common situations are: 

  • A lack of communication between the agency and the original creditor
  • Poor reporting and record keeping procedures.

Many of you have had a bill turned over to a collection agency.  What happens is the original creditor lists the item as a collection in your credit file.  After a short period of time your account may be transferred to a collection agency who also lists the item as a collection in your credit file.  Accounts may be sold, or reassigned  to another agency or reassigned by the original creditor to a new agency.  The problems is often that the account is being listed several times on your report and even if you pay the original creditor or the last agency to collect on the account, chances are very high that the duplicated collections will remain on your record for SEVEN years, unless you get it corrected.  

Another Major headache has surfaced.  Consumer Financial Services corp. (CFS) specialized in buying VERY OLD out of statute credit card collection accounts.  CFS went out of business in the midst of scandal and formal charges.  The problem is that other collection agencies purchased these accounts in bulk and started reporting them as new collections.  Many of them without proper notation of the original creditor, date of last activity, etc.  I personally know a person who worked for CFS prior to their demise and they said that they believed CFS had some of the poorest records and record keeping procedures and did not even know who the original creditor was in many instances.  I strongly suggest that you thoroughly investigate any collection with  CFS listed as the listing creditor or original creditor.

You may be the kind of person that ALWAYS pays every bill on time, but your health insurance company does not.  You may be surprised at the amount of collection items in your file.

Laws applying to Collection Agencies 

Collection agencies and collectors must comply with the Debt Collection Practices Act, 15 USC 1692, which strictly regulates debt collector's actions in acquisition of location information, communications in connection with debt collection, harassment or abuse, false or misleading representations, unfair practices, validation of debts, multiple debts, legal actions by debt collectors, furnishing certain deceptive forms. If you find yourself the target of debt collection action, make sure that the collector is staying within the law, or they can face civil liability $$$ .   Here is a recent example.  Here is a link to Bud Hibbs, one of America's consumer credit experts. 

you can use a letter like the sample letter if you are contacted by a collection agency, attempting to collect  a debt which you do not owe. They cannot continue to collect, until they have verified that the debt is actually valid, once you have sent them this notice. You must send this letter, as all the others, registered mail, and retain copies and all receipts as proof of mailing.

for a free copy of your credit report right now, click here.

The Credit Industry

The Inaccuracies in Credit Reports

The Fair Credit Reporting Act * FCRA

The steps required to restoring your good credit

Getting a copy of your credit report

Review Your Credit Report for Inaccuracies

Correcting Inaccuracies

Collection Agencies and your credit file

How to settle a debt and negotiate a settlement

Negotiating your credit rating

Building New Credit

Dealing With Debt

Credit Scores

Sample Letters

Credit Monitoring

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