Did a Debt Collector Affect your Credit Score?

General Rule: A debt collector can report your debt to a credit reporting agencies, however, there are certain requirements. If they report false information or prematurely, there is action you can take.

Many factors impact your credit score. Two major factors are the amount of debt you owe and whether or not you make timely payments. This information is typically relayed from a creditor or debt collector to the credit reporting bureaus.

What a debt collector reports can seriously affect your credit score. Sometimes, a debt collector reports this information too soon. On other occasions, intentionally or not, they report inaccurate information. What can you do about it?

Fortunately, there are steps you can take. Also, for certain actions by the debt collector, you have protections under the Fair Debt Collection Practices Act (FDCPA). Read on to find out what you can do if a debt collector affects your credit score.

What Did the Debt Collector Report and When?

There are two primary factors that determine whether a debt collector’s report to a credit bureau is legal. The first is the content of the report. It is a violation of the FDCPA to knowingly report false information to a credit agency. It is also a violation if they reasonably should have known that the information they reported was false.

The second factor is the timing of when the debt collector reports the information to the credit bureau. A debt collector cannot report your debt until it is past due for 31 days or more. In addition, there are certain communication requirements. The two primary communication requirements are as follows:

• The debt collector had an in-person or conversation on the phone about your debt; and
• They mailed or emailed you information about your debt and waited at least 14 days in case the mail was not properly delivered.

If a debt collector fails to follow either of these requirements, they have violated the law.

The FDCPA and Debt Collector Harassment

The FDCPA protects consumers in many different ways. The overarching goal of the FDCPA is to ensure that the debt collection process is transparent and fair. As a result, this federal law prohibits various forms of harassment and abuse. This includes false and premature reports to credit bureaus. It also includes threats to illegally report information to these credit agencies.

The FDCPA prevents other forms of harassment and abuse that debt collectors may use to coerce you into making a payment. It is important to be aware of the many different tactics that the FDCPA prohibits.

Note: The FDCPA governs third-party debt collectors, not the original creditor.

What Can I Do if a Collection Agency Wrongfully Impacts My Credit Score?

If a collection agency reports your debt properly, the primary thing you can do is work to rebuild your credit score. You can do this by reducing your debt and making payments on time. However, if a debt collector wrongfully or prematurely reports your debt to a credit bureau, consider the following options:

• Submit a Dispute with All Credit Reporting Bureaus. There are three credit reporting bureaus: Equifax, TransUnion and Experian. Submit a dispute with each of these credit reporting agencies and detail the error or illegal action.
• Demand a Correction from the Debt Collector. You should also notify the debt collector in writing about the error. When doing so, you should also demand that they correct the error with the credit reporting bureaus.
• Submit a Federal Agency Complaint. You can submit a complaint about the wrongful reporting to the Consumer Financial Protection Bureau (CFPB). The CFPB provides rules on when a collection agency can report your debt. You can also submit a complaint to the Federal Trade Commission (FTC) for any violation of the FDCPA.
• Sue the Collection Agency. If your credit report is not corrected or you suffer damage, you may consider filing a lawsuit. Discuss your situation with an attorney to determine if this is a good option.
• Propose a Debt Settlement. This option will allow the debt collector to avoid lawsuit if they agree to a discounted settlement. This may be an advantageous option depending on the amount of debt you owe.

Conclusion

Having a debt, especially one that is past due can have a serious impact on your credit score. However, sometimes a debt collector reports information prematurely or inaccurately.

When this happens, it can create serious damage to your credit score. If this happens to you, take the above action to resolve this issue. If you are unsure or have questions, seek advice from a consumer rights attorney.