Debt collectors

Due to some screw up by my health insurance provider (which I am trying to sort out), a bill was left unpaid and my account was turned over to a debt collector. I immediately paid the debt collector, but my concern now is that my credit card rates will go up. Has anybody else experienced this?

if not, ask them to send you a letter. if this item comes up on your credit report (annualcreditreport.com) you can dispute it and send a copy of the letter to the credit agencies showing the item has been closed.

Many times if you're contacted by a debt collector and immediately pay (provided it's a valid debt), there is no contact with the credit bureau. On the other hand, a late payment to a credit card has a higher chance of an increase in interest rates across the board since they're reported monthly.

It probably will, unfortunately. Many times, you can ask the collection agency to remove the record from credit reporting agencies before you pay, and they will (this is technically illegal, but it's a law designed to protect creditors, not consumers, so fuck 'em). And since universal default is not yet illegal -- soon to be, though -- credit card companies may move your interest rate when your credit score adjusts.

I would call the collection agency and see if they even reported to the credit bureaus in the first place. Sometimes they wait to report so they can use that as leverage to get you to pay, and since it sounds like your account was not in collections for very long, there is a chance they never reported it.

Contact them, indicate that you are willing to pay off the complete debt BUT only if they provide you a letter that they will remove any negative information in your credit report (all 3 major credit reporting companies). Do not rely on a verbal promise. Then, after the debt has been paid, check your reports and make sure they followed through on their promise.

Even after all this, you will likely need to retain an attorney and use that letter and the threat of a lawsuit to get them to follow through.

Even with doing all that, it's likely the banks will raise your interest rates (and worse, reduce your credit limit). There isn't much you can do about this part except plead with them that it was all a bookkeeping error and that you have a letter from the collection service to that point, etc. It probably still won't do any good.

Good luck.

Just so you know.

in California. Otherwise I'm pretty sure the lawyer I retained would have told me.

do you mean reporting the account as current and paid, but formerly in collections, or removing any evidence that the account went into collections in the first place? Pretty big distinction, there, credit rating-wise.

on the debt collections part, removing is more like "correcting the record".

They can correct the record at your request. And it's not illegal. Only works if you jump on the account right when the incident happened that caused the entry to be made.

But yes, they removed any evidence that the account went to collections (since I was able to argue that it was their mistake that the account went to collections in the first place).

I called the debt collector and was told that since I had paid quickly, they would not contact the credit bureaus. They also said to send a self-addressed stamped envelope if I want a "paid in full" letter.