Some of the things that get reported on your credit report can later turn into much more serious things on your report and we’ll discuss those as we go along. Once those things find their way to your credit report, your scores will drop, the damage will be done, and there will be very little that you can do, other than prevent them from showing up in the first place. That is where your vigilance should begin, prevention!
The first negative item you don’t want to see is a COLLECTION. You can have a collection reported to the bureaus and not even know it! How is that possible? Let’s imagine you go to the emergency room at your local hospital. You think something might be broken, it hurts like crazy and the pain is not going away. The ER staff goes into action, x’rays are taken, nothing broken and everything is cool. It’s only a major sprain and time will heal you.
This seems like a pretty harmless situation, you have great health coverage and you’re happy you don’t anything broken. You leave the hospital and go on your merry way. It is now nine month’s later, you have decided to buy a house, and there are no repercussions from your old injury, or are there?
You, being one of my readers, have pulled your credit report before you make an offer on that house you like and you find out that your credit scores aren’t where you think they should be. How can there be a $75.00 collection from a Dr. ……….. on my credit report? I don’t know this doctor, what is going on here, it has to be a mistake?
You call up the hospital where you were treated for your old injury and they tell you Dr. ………….. is the doctor that read your x-ray, you never even saw him, didn’t know he was involved in your process at all. The doctor never submitted any invoices to you, they went right to your insurance company and for whatever reason the good doctor didn’t get paid. A few month’s passed by and the doctor, still unpaid, filed a collection.
Oh my! The damage has been done now. Your scores will drop on all three reports. It is at this time where you might begin receiving letters from the collection agency people, and maybe they’ve also tracked you down and you’re getting phone calls too. At this point know there is a situation you need to handle. The important thing to remember is that once that collection gets filed things will not get better for your scores. People may try to tell you that if you pay that collection agency your scores will improve because now that collecion gets shown as a ‘paid collection.’
I will tell you that it will not matter, the mere filing of that derogatory information will harm your scores whether it gets paid or not. I will also tell you how I would handle that same situation. The first thing is not deal with the collection agency. They may tell you ‘we’ll settle this account for $50.00.’ Cool right? You’ve saved $25.00 and you get reported as a ‘paid collection.’ If your scores don’t go up as a result, how did that help you?
Instead of dealing with the collection agency go directly to the doctor’s office and with hat-in-hand express your regret that you had no idea they didn’t get paid and pay the full amount owed. You see when the doctor turned you over to collection agency, it was done with the knowledge that the collection agency would charge a percentage of what they collected and send the doctor the balance.
You will want to take this action for one very good reason. The reason being that the only people that can remove that negative collection information are the ones that put it there! The collection agency doesn’t have that power so why would you deal with them? The doctor has the power to remove it and I’m saying that in my opinion, you go there and pay the full amount that you owe, and ask ‘I’m sorry this happened, I didn’t know about it, will you please remove it from my credit report?’ My point is that there is a very good chance they will remove it and by so doing, it will be as if it was never there!! I’ve seen it happen the way I’ve just described to you.