Now, when everyone is scrambling to bring in more money, municipal organizations are turning to debt collection agencies to collect outstanding debts. This can include parking tickets, and even overdue library books!
Do you have an old parking ticket that you failed to pay? If so, take care of it now, before the collection shows up on your credit report, where it can pull down your score.
The same is true of small local accounts. Where once small proprietors may have been willing to wait and hope that you’d settle the account, now they need the cash, even if it’s a reduced amount. So they sell it to a credit collection agency for pennies on the dollar.
This can be a tough call if you’ve failed to pay because you disputed the amount. But your own credit scores may be more important to you in the long run than punishing a vendor for poor workmanship or some other transgression.
Why not make an appointment to talk it over? You know if they turn the account over to collection, they’ll take a loss. Perhaps you can negotiate a partial payment in exchange for clearing the account. Just be sure to keep your temper under control – you don’t want to make matters even worse.
If the damaging information is already on your credit report, contact the credit bureau and ask for instructions on filing a dispute. If it’s on all three reports, contact all three of them. When you submit the proper paperwork, they’re required to investigate and get back to you – usually within 30 days. If you can show proof that this is an invalid charge, they’ll remove it from your credit report, and your FICO score will automatically go up.
It is now more important than ever to protect your credit scores, so get your free credit report today and check to make sure that any damaging entries are valid. If they are, and you can resolve them by paying off a small debt, do so.
When you check your report, also check for accounts that were paid off long ago but payment not reported, and signs of identity theft. This would include accounts you’ve never had and accounts reported under an address that isn’t yours. You might also find accounts under a different name – the result of a data entry error in social security number entry.
Dispute these entries and let the credit bureaus correct the errors. They will – but it’s up to you to let them know that errors exist.