A common question my clients have is why one negative account turns into two?
Here’s a scenario that happens often with a credit card. You use your account for years and you fall on hard times and can’t pay the balance off. So you stop paying and the credit card account begins reporting 30, 60, 90, 120 days late. Once it hits the 120 mark the bank will typically “charge off” the account. They then sell that debt to a collection company. Most are sold for a fraction of the balance.
So now you have a new collection account appear on your credit report. You also have the charge off from the original creditor. This one debt has now turned into two derogatory accounts on your credit report.
It’s best not to ignore your credit card debt even if you can’t pay off in full. It’s best to communicate with your credit card company and let them know you can’t pay off the debt right away, but work out a repayment plan so that the account doesn’t go into collections nor show as a charge off.
If you need more information about what to do about specific scenarios on your credit report, feel free to contact me direct. I’d be happy to help.
President and Certified Credit Expert