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How Should You Deal With Past Due Accounts?
Posted on August 14, 2010
Repairing your credit involves taking care of accounts that have become past due. These delinquent accounts hurt your credit score the most because credit history has the biggest impact on your credit score. In fact, payment history is 35% of your credit score. No other factor has as significant impact on your credit score.
Types of Past Due Accounts
There are several different types of delinquencies that affect your credit score.
Past due accounts can include accounts that have late payments – 30 days, 60 days, 90 days, 120 days, and 180 days are the typical increments of late payments. Every month that you’re late on your payment, an additional 30-day late notice is placed on your credit report.
Charged-off accounts are those that have gone more than 180 days or six months past due. Though phrase “charge-off” may fool you into thinking you no longer have to pay these accounts, that’s not the case. Charge-off is just an accounting term the company uses to show that the accounts have been written off as uncollectible. However, they’ll still try to collection on these accounts.
Debt collections are accounts have been sent to a collection agency. The original creditor has given up on trying to get payment from you and has solicited help from a third-party company.
Judgments, tax liens, repossessions, and foreclosures appear in the public records section of your credit report and also have a detrimental impact on your credit score. These types of delinquencies involve the court and may be difficult to erase from your credit report as long as the court record exists.
How to Repair Past Due Accounts
There’s no one way to repair your past due accounts. You’ll have to use several tactics to get rid of them. In the end, you may clear your credit report of some of the past due accounts, but not all of them.
Dispute with the credit bureaus. The credit report dispute process is typically the first tactic you should use to remove information from your credit report. Credit bureaus are required to remove inaccurate, incomplete, or unverifiable information from your credit report. If you have proof that a credit report listing is not accurate, use the dispute process to have your credit report updated.
Ask the company tor re-age accounts that haven’t been charged-off. If you have accounts that are less than 180 days past due and you can pay the entire delinquent balance, negotiate to have your account brought current. Ask your creditor to erase the prior past due notices from your credit report in exchange for payment.
Negotiate deletion exchange for payment. To achieve this, you’ll have to talk to the right person in the company. The lower-level customer service representatives and debt collectors often aren’t authorized to delete things from your credit report. Make sure you talk to someone who is.
You may have to work with an attorney to get public records like foreclosure and repossession removed from your credit report. If you can show that there is something about the entry is questionable, you may be able to successfully remove it from your credit report. But, the hard part is finding the necessary loopholes. That’s where an attorney who’s knowledgeable about your state’s laws comes in.
Be careful about using a credit repair service that may use illegal or unethical methods to clean your credit report. Use the Better Business Bureau to make sure you’re hiring a reputable credit repair service.
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- What is Bad Credit, How We Get it and How to Escape it
- How You Handle Debt Affects Your Credit Score
- Putting Together a Credit Repair Plan
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