Have you struggled with debt in the past? Are you struggling now? Or have collection agencies been hounding you to pay them by calling and sending those dunning letters? If you want to improve credit scores you have to stop ignoring communication from debt collectors and stare your debt right in the face. There's no reason to be alarmed though, improving your credit scores can be done easier than you probably thought was possible if you follow these simple steps.
Dispute Debt with Collection Agencies
When original creditors do not receive timely payments from you, they may close your account and even charge it off. When this happens they will usually sell your account to a collection agency to try to attempt and collect the unpaid balance. Whenever you receive a letter from a collection agency you have 30 days to dispute the debt and you should do this any time you receive such a letter.
What you can do is send a debt validation letter directly to the collection agency to make them show proof that they are legally able to collect the specified debt and that you are responsible for repaying the debt. If they do not reply within 30 days, they are required to stop collection activity until they have provided the debt validation that you have requested.
If you have looked over your credit reports and you’re trying to improve credit scores you may notice there are collection agencies being reported that you haven’t ever heard from. What you can do is send them a debt validation letter telling them that you weren’t aware of the account they’re trying to collect and kindly request validation. If it has been longer than 30 days, they aren’t required to respond to your debt validation request but many of them will anyway and you may even get lucky if they can't validate the debt they're saying you owe.
Pay off Collection Accounts with PFD Letters
If you have sent debt validation letters and a collection agency has validated the debt then you can try and send them a PFD letter. PFD stands for Pay For Delete. Essentially you’re going to tell them that you agree to pay a specified amount in return for deletion of the tradeline that they have reported to the credit bureau(s).
There are creditors that won’t agree to PFD letters, but there are plenty of others that will so it’s definitely worth a shot. The collection agency is getting paid and you will lose a negative tradeline so it’s basically a win-win for both parties. To have the best success rate with a PFD be sure that you personalize your letter and offer to send the full balance that is owed.
Rebuild Your Credit
Once you begin to get negative tradelines removed from your credit report you’ll probably notice at least a slight increase in your credit scores. To further improve credit scores you should slowly begin to acquire new credit. What you can get approved for will greatly depend on your credit scores and what is on your credit report but you should be able to at least get approved for a secured credit card. You might also get approved for an unsecured credit card, auto loan or other types of credit. Always be sure to make your payments on time and do not max out your credit cards. Before you know it, your credit scores will begin to improve.
How to Find My Credit Score?
Resources:
AnnualCreditReport.com: " Request Your Free Annual Credit Report." Retrieved October 14, 2010.
DebtConsolidationCare.com: "How to Negotiate a Pay for Delete Agreement." Retrieved October 14, 2010.
Melinda Friedland - Melinda Friedland was recently married in the summer of 2009 and has 4 young children so she knows what it's like to be busy. She has been ...
