 |
A collection account is a loan that has been turned over to a third-party debt collection agency due to negligent payment practices of the borrower. The collection agency assumes the responsibility of collecting the debt for the original creditor. While the borrower makes payments on the collection account, the account will remain open and will be listed as a “collection account” on the borrower’s credit report. Information on collection accounts are gathered by credit reporting agencies, which compile and store this information in your credit report. The information is then made available to consumers in a report, which can be accessed online or by mail.
Information regarding overdue debt from collection agencies usually appears in the “public records” section of a credit report. Information in this section is usually considered detrimental to your credit score and should be closely monitored. In fact, you’ll want to make every effort to ensure this section is spotless. After a collection account has been paid in full, it will be listed as a “paid collection” and will stay on your report for seven years from the date of the first missed payment that led to the collection. It’s important to have a plan to pay off these accounts as doing so could mitigate the negative impact it may have on your credit score. If you are concerned that one of your accounts may go into collections, or if you would like information on how to deal with a collection account, seek the advice of a credit counselor or a trusted financial advisor.
|
|
