How Debts in Collections Affect Your Credit
Many people get behind in their finances from time to time, as sometimes the job can go sour or the economy can take a hit.
How Your Credit Is Affected
The effect this will have on your credit is related to two factors: your current credit score and the size of the debt. The higher your credit score is, the more severe the consequence will be. If you already have a low credit score, there will still be a drop, but it can only drop it by so much. It is a percentage of what your score is, so pay extra special attention to your bills if you have a high credit score.
Small debts may not have any effect on your credit at all. Anything under $100 may not even show up on your credit report. The main determining factor on this one will be how the credit was attained and whether the debt used to be higher. If the amount came down to under $100, it may not affect you. If the total debt grew to the amount, there’s a possibility it can have an adverse effect on your credit.
You might think that having your debt sent to a third-party debt collector is the end of your finances, but that is not true. There are many people and couples that have hit hard times and then dug themselves out little by little. The key is to educate yourself on the topic of personal finances and to discipline yourself when it comes to spending. You might even want to hire a personal finance professional to sit down with you and help you get your finances in order.
Correcting the Issue
The best way to correct the effect the debt is having on your credit score is to pay it off and have the “collection”
Debt collections is a serious matter, so do all you can to avoid having your debt put into collections. Perhaps you can borrow some money from a family member or a friend. Or maybe you can get a second job for a while until you get your debt paid off. The important thing is to address the situation at hand and take measures to resolve the situation. Getting involved with debt collectors is not the end of the world, so cut yourself some slack, but do the necessary work in order to make amends when it comes to your personal finances. You’ll be glad you did in the long run.
To learn more about how Debt Collections affect your credit, visit us at http://www.360creditconsulting.com/
Original article published at: http://www.360creditconsulting.com/