Rebuild Your Credit Before the Year Ends

As we get closer to holiday time – and holiday shopping, it’s a good idea to check your credit report before subjecting yourself to the multitude of credit applications we may be going through while trying to take advantage of the best holiday deals.  Take the time to review your accounts and make sure your credit report is accurate.  If your report is less than perfect, make sure the negative accounts are correctly reported and in fact belong to you.  If your credit report shows collection accounts, following these five steps will help improve your credit and raise your credit score by 2016.

First, make a list of your collection accounts and figure out who are the original creditors.  When you fail to pay off your debts and collection agencies start coming after you, the agencies are allowed to report their collection account separately on your credit report. This means not only can you have the original creditor reporting the debt as a charged off account, but you can also have the collection agency reporting the account as being in collection.  Contact the original creditors of all of your accounts and find out who it hired for collections purposes or who it sold the debt to.  Make a list of each creditor and each collector so that you do not have more than one collector collecting on a delinquent account.  

Second, figure out who and what you need to pay.  After you have contacted all of the original creditors and have a list of who you owe, decide what to pay.   Take your list of collection agencies and break it into groups of what you know to be accurate and debts you are unsure about.  With the debts you are unsure about, write a dispute letter to the collection agencies to request additional information or to notify them that the account is inaccurate.  If you have supporting documents proving that the debt is invalid, send a copy to the collector and demand it cease and desist all collection efforts and stop reporting the debt to the credit reporting agencies.  While this may not necessarily get the item deleted from your report, it will get the item reported as a disputed debt, which can help your credit standing.

Third, figure out your financial situation and pay off what you can of the debts which you are positive are accurate and belong to you.  First, try paying the original creditor.  If it will accept the money, it is always better to start there. Collectors often add a hefty percentage to your debt and it reflects better on your report to show the original debt as paid in full.  If you have a number of accounts that need to be paid off put them in order of newest to oldest.  Start to pay off your most recent accounts first.  Collection accounts can only be reported on your report for seven years from the date of last activity and the older the account, the less damaging to your score.  Try negotiating a settlement amount or a payment plan if you are not in a position to make a lump sum payment.        

Fourth, make sure to get proof of your payment or agreement to pay in writing.  Before making any payment, communicate with the collector or original creditor and request proof of your agreement in writing.  In the event you make payment and your account in never updated, you want proof that an agreement was in place.  If they will not provide it to you, make sure to save all the cancelled checks that the collector cashes.  This way, nobody can deny they received your payment. 

Lastly, follow up your payment but regularly reviewing your credit reports.  After payment is made, it often can take a credit reporting agency 60 days to update your report.  Make sure your report accurately reflects your payments.  Follow our instructions for disputing your credit report if you need to. 

If you are having problems with a collection agency and your credit report contact SmithMarco P.C. for a completely free case review.