How to improve your credit score (Part 3 of 5)

First you worked on getting your credit report accurate, and then you worked on your late payment history. If you have completed those things, then your credit score should have improved. Remember, you did not get a bad credit score over night so repairing your score won't be accomplished that quickly either.

Now it is time to start working on any collection accounts.

First, make a note of each account and compare it to the original account. Once a creditor turns the account over to a collection agency, they should be reporting that the account is charged off or closed. You would prefer to have them report it as closed but they have the right to report charged off or turned over to a collection agency.

Next, you should work to get them resolved. If you owe the money, then work a payoff with the collection agency and have them remove their information from the credit report. They are not required to remove the information when you have paid the account off, but it never hurts to ask for that in the negotiation. But when collection accounts have been paid and are now closed, it will help your credit score over the course of time. An open account keeps your positive information from overriding the negative if they are left open. But a closed account will stop doing any additional damage if it is closed.

If you have some very old accounts you may not want to dispute or investigate them. After seven years negative information will come off your credit report. But if you dispute or investigate a very old account they may update information and cause a change to the date it would drop off. Then you would be in a worse situation than if you had left the account alone. But again, with a very old account, you might be able to negotiate a removal if you were to pay the balance. The collection agency might see that you would be willing to pay off an old account if they remove the negative information but may not get anything if they don't. If the account is close to the seven year mark, then they are more willing to jump at the chance.

For the future, don't allow anything to go to a collection agency. If you talk with your creditors generally you can work out an agreement to keep it from going to collections. Then the only negative information being reported is from the original creditor. But if you allow things to go to collections, you get at least two negative things being reported, one from the original creditor and one from the collection agency.

Next - Judgments

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