CREDIT REPORTING

 

Debtor will receive a “Notice Before Credit Reporting” letter.  If we do not obtain response and payment, debt will be reported. 

 

The Basics:

 

Who - The big three credit bureaus. Equifax, Experian, Transunion.

What - Negative file of debts, payments, adjustments, closeouts ect.

When - Reported monthly or if necessary immediately.

Why - Improve collection recovery rates.

How - Electronically downloaded to all three databases.

 

The Benefits of Credit Reporting:

 

Increase collection results and avoid potential losses from professional debtors.

Debtors can ignore or avoid telephone calls and collection letters.  However, when they go for credit (and eventually they will), they will need to satisfy the debts on their report.

Eventually most individuals will attempt to: buy or sell a home, refinance a property, purchase or lease an automobile, apply for a credit card or apply for a HELOC.  And when they do, they will most likely need to satisfy any outstanding debts on their credit report.

Most debtors have multiple debts.  If a debt is not reported to the bureaus, then chances are the individual will not feel an obligation to pay the debt.  There is an argument that if the debt is not important enough for you to report, then the debtor may take the attitude it is not important enough for them to pay.

Individuals have cycles of success and hardship.  Timing is everything in collecting money.  Either they have it or they don't.  If the collection efforts don't include credit reporting then potential future successes will not be capitalized on.  An item on a credit report remains for seven years - adequate time for an individual's cycle to change.  If the account is not actively being worked and not credit reported, this will equal missed opportunity to recover the debt.

 

Credit Reporting is...accepted, anticipated and concerning...

 

One of the first questions asked by a debtor to a collection agency is always: "Does this debt affect my Credit Report?"

Every lender or creditor pulls a credit report before approval of credit is granted.  All banks, mortgage companies, credit card issuers, auto loans or leases and many others.

Consumers or patients now monitor their own credit report because they are concerned and/or interested in their "SCORE".  Each of the three bureaus, as well as several other credit based companies offer monitoring services.  Individuals are notified either online (email) or via direct mail of any changes to their credit report and credit score.

It is far more frequent that individuals request copies of their own credit report these days.  Prior years the bureau made it very difficult to obtain such information.  As a consulmer, everone is entitled to a free credit report, and more people than ever take advantage of this service.  They do so in part due to the simplicity of the internet.

The average debtor now understands that an outstanding debt on their credit history translates into a lower score and therefore potentially less available credit.

 

Helpful information and Websites on Credit Reporting:

 

www.equifax.com

www.experian.com

www.transunion.com

www.annualcreditreport.com

www.freecreditreport.com