In our second installment of Frequently Asked Consumer Questions, we address the question:
How will collections affect my credit?
Unfortunately, due to the different clients with whom we work, each scenario is different. Sometimes a collections issue will be reflected onto your credit, other times it will not. If it does reflect onto your credit score, there are some simple things to do in order to get it back on track:
1. Pay Your Outstanding Balance ASAP– The faster the payment is paid, the sooner it can be taken off of your credit report. Not to mention that a “paid in full” looks much better on your credit report than a delinquent collections account.
2. Stay Up to Date on Other Payments– This is Credit 101. The more you are on time and up-to-date with your other credit payments, the more your credit score will increase.
3. Pay More than the Minimum Payment– The second lesson from Credit 101. Sure, paying more means less money in your pocket at that time, but it will benefit you more in the long run. The more you pay, the sooner the bill is paid off, and the sooner you can move on.
Now sometimes a collections issue won’t affect your credit at all, in which case it would simply need to be paid in full. But for those other collections issues, be sure you know how to handle the situation correctly and in a timely manner.