A collection or charge off entry into one’s credit report is the worst possible scenarios for a debtor. It has a profound impact on one’s credit report. A charge off is usually declared by the original creditor who has decided to give up on collecting the old debt. This usually happens when the debtor has become a chronic defaulter usually for a period of 6 months or more.

The old debt is usually sold to another company by the original creditor. These companies are known as collection agencies. They have personals who will collect the debt form the debtor by any means necessary. They have no interest in credit history of the debtor and can even go to the means of filing bankruptcy on the debtor in order to liquidate and collect the debt owned towards them.

Collections are reported into one’s credit report in various forms. This depends on the debtor, if the individual has paid the debt to the collection agency then it is reported as completely paid collection, if the debtor settles for a renegotiated debt amount it is entered as settled for less collection and if the debtor has not yet paid back it is reported as unpaid collection. Any collection report on one’s credit report makes them a potential financial liability in the eyes of money lenders.

It is important to take all measures necessary to prevent a collection report being entered into one’s credit report. If due to unavoidable circumstances a collection report is entered, then there are ways by which it can be removed. Usually if proper steps are not taken to improve one’s credit report then the charge off or collection report will stay for 7 long years.

If there is a collection entry made into one’s credit report it is important to take certain legal measures in order to improve the credit score and if possible to erase the collection entry. This can be done by obtaining a copy of the credit report from any agencies. Once the copy is obtained it should be completely read in order to identify any errors or entries made on baseless grounds. According to provisions of the FCRA or the Fair Credit Reporting Act , any individual who feels that there has been an error in the credit report can challenge the report and if the error is proved they can get the negative remark removed from their report

One must understand that several collecting agency could have filed in charge off report for the same debt. In such cases all the different credit reports from different bureaus must be obtained in order to find errors in any of the negative report. It is wise to challenge each negative report individually in order to maximize the chances of removing as many negative entries as possible.

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