Financial and collections experts are frequently asked questions about how debt affects a person or corporation’s credit. After all, the road from debt to collections can be a long one indeed. Below are the most common questions, as well as some answers, to provide debtors with the facts surrounding collection myths.
Which is Better for a Person’s Credit Score: A Paid or an Unpaid Collection?
Surprisingly, paid collections are no better for a person’s score than those that remain unpaid. However, resolving collections brings other advantages, such as preventing the sale of the debt and minimizing the chance of a lawsuit, either of which will affect the score even more. The experts at Cane Bay Partners can provide additional guidance and advice on credit scores, debt, and collections.
Are Medical Bills Excluded?
Medical bills in collections are not excluded where a person’s FICO score is concerned. Many industry experts, as well as consumer advocates, argue that medical bills are different from other debts as they’re usually beyond the debtor’s control. These debts can severely damage a person’s credit score, and they remain on a credit history for up to seven years.
Will a Collection’s Removal Raise a Person’s Credit Score?
It may, but it’s not guaranteed. Because the time elapsed since the debt was sent to collections affects a person’s credit score so significantly, the removal of a recent collection may be expected to raise their score. Conversely, if there are numerous collections and the person can get the oldest ones removed, their score may not improve that much.
Get More Information Today
Debts in collections can happen to any person or company, whether they’re managing their money responsibly or they’ve fallen on hard times. Separating fact from fiction about credit scores and collections may help a person make more of the proper choices and avoid some mistakes that lead to undesirable results. While obtaining a free credit report once a year is a great place to start, David Johnson Cane Bay may be able to provide further help. Visit the website for additional details or call today to request a financial consultation.