By Sara Gilbert - GreenPath Community Engagement Liason
When someone owes money on a medical bill, telephone bill, credit card or other similar bill, and that debt is not paid within 90 days, the original creditor will often contract with a collection agency to try to collect what it is owed.
Accounts in collection are routinely reported to the credit bureau and damage your credit score. This has serious ramifications for the credit standing of almost one third of Coloradans. Similar statistics were noted for all Americans.
The high number of collection debts carried by so many might be continued fallout from the recession. Getting a handle on unpaid accounts will certainly improve your finances.
If you have a collection account on your credit report, you’ll most likely have difficulty borrowing until the debt is paid. Employers and landlords also use credit report information in hiring and leasing decisions.
The cost of borrowing goes up for people with poor credit scores. The average amount of collection debt for Colorado residents in collection is $5,837.
What can you do to make sure you don’t have accounts in collection, and what steps can you take to resolve them if you do?
Get your free credit report at www.annualcreditreport.com to see if you have an account in collection. This site is provided through federal regulation and allows us one free report per year from each of the three credit bureaus.
Follow the instructions to look at all three reports, as information about your accounts can be reported differently. Make sure you recognize the accounts on your credit report. If you have accounts in collection, they will likely be reported along with the contact information for the collections agency.
It’s your right to review the information to make sure the debt is yours. If you’re unsure, contact the collection agency and request written information about the debt, including information about the original creditor.
Making a payment plan is critical to getting collection debts resolved. It’s recommended that you pay smaller accounts in full as soon as possible.
Contact the collection agency before sending payment to make sure it still holds the debt. Request that the collection agency send you a notice of proof of payment and save this information.
GreenPath counselors are equipped to help review your credit report and look for ways that you might be able to make a payment offer to get the debts paid off over time. Sessions to review all of your options are offered at no charge in our Fort Collins office or over the telephone.