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What collection companies don’t always tell you!
When you settle a debt with an original creditor, such as a credit card company, the creditor reports your debt to the credit bureaus as “settled.” Because you paid less than the full balance to satisfy the account, your credit scores suffer. If a collection agency owns your debt, however, that generally means that the original creditor has already charged off your account. Provided the collection agency has already reported the debt to the credit bureaus as a collection account, the damage to your credit has already been done. Settling the debt with the collection agency will not lower your credit scores any further but it still remains a derogatory item preventing your score from rising and reflecting negatively to anyone whore views your credit report. Often your debt will be sold to multiple companies, and is then reported as separate debts from separate creditors, next thing you know the same debt is reporting as three different items on your credit report hurting your score over and over again in a never ending vicious cycle.