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Dealing with collection accounts

Collection accounts happen when creditors determines they will be unable to collect payment by standard means and transfer the debt to a collection agency. This agency will then pursue a debtor in attempt to collect payment. Collection accounts are a problem that many Michigan residents face, but it can help to know more about how these accounts affect credit and the best ways to deal with them.

A collection account can have a negative impact on a person's credit score. These accounts may remain on a score for up to seven years and 180 days. They will often remain on the score even if they are paid in full, but they will be marked as paid. The impact of paid accounts diminishes over time, but they often continue to have a negative impact until they are completely removed.

There are a variety of instances in which it is possible to remove a collection account before the seven-year timeline has passed. For example, any debts for which there was no contractual agreement to pay should not be reported. Neither should medical debts that insurance is responsible for even if they have not yet been paid. Laws related to credit reporting sometimes change suddenly, and it is usually the debtor's responsibility to check their score and report any errors or inconsistencies.

Credit scores have a major impact on finances and bankruptcy. It is important that anyone considering bankruptcy or other major financial decisions to understand what is reported on their credit score and ensure it is accurate. Credit reporting agencies are obliged to remove inaccurate information and accounts and update a score to reflect any changes in the law, but this can sometimes be difficult to prove. If a credit agency is not cooperating when it comes to changing a credit score or removing inaccurate items, a person may consider having the help of an attorney.

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