The final Fatal Mistake I am highlighting in the series is this: If you have ever had a collection account, judgment or tax lien, assuming the creditor, collection agency or taxing body will report the resolution to all three bureaus is a big mistake! That goes for erroneous reporting you find on your report too.
Don’t assume that just because you paid-off a collection, judgment, or lien that it is immediately reported to the bureaus. Even when you close an account, it is often not efficiently reported as such to all bureaus. It is not uncommon to see such activity reported to just one bureau, even when the adverse account was being reported on your credit report by two or all three bureaus. Unfortunately, agencies and creditors are quick to report you when you own them money or have made a recent mistake, but they can be very slow to report the final resolution to that account when you have paid them off. Collection agencies and the creditors that have sold your account to the collector are both extremely poor at taking the final step and reporting that the account is paid in full.
This problem is magnified when
there has been a bankruptcy! Often times, accounts that have been involved in a bankruptcy have been bantered about between the creditors and various collection agencies long before the filing for bankruptcy protection. The creditor is reporting the account as delinquent and is likely reported it as an account a “charge-off”.
At the same time, the creditor has sold the “bad account” (sold the paper) to a collection agency, in hopes of getting just a small percentage of their loss back if the agency is at all successful in the collection of a bad debt. This goes for credit cards, department store accounts and even installment loans like auto loans. The “paper” (account) is sold back and forth between creditors and agencies as they go from having a delinquent pay history, to that of no payments being made at all.
The problem is that after one files for bankruptcy protection and the
time it takes to successfully bankrupting the debt(s), the accounts may
be sold multiple times. In addition, it is not uncommon to see an
account go to collection AFTER it has been discharged in a bankruptcy.
You are thinking that you have a fresh start to rebuilding your credit
after the bankruptcy, yet there may be new collection accounts dated
after the discharge which has a huge impact on your already damaged
credit scores.
In addition, just because you may have been successful at having
certain debts discharged in a bankruptcy, don’t assume the discharge of
that debt is reported as such on your credit report. In fact, less that
50% of the accounts, collections and/or judgments discharged in a
bankruptcy will show as such after the completion of the bankruptcy.
You have to, again, follow up with each individual bureau and supply to
them copies of your discharge and list of creditors to insure that it
is reflected accurately on your overall credit report. It can take
years rather then months to see a rise in your credit scores if you
don’t follow as outlined above.
It is your responsibility to follow through with any such activity and make sure that all three bureaus have the most recent and accurate information possible. You can write and/or file online disputes with each individual bureau and supply copies of paid receipts and any correspondence you may have to insure that your record is recent and correct.
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