What to do if your debt is turned over to a collection agency

KPLC 7News at Six- Oct. 1, 2018 - Credit scores

LAKE CHARLES, La. (KPLC) - We all know how important good credit is.

“Credit is very important when it comes to buying a home, or purchasing a vehicle," said Brian Abshire, a commercial lender for Iberiabank. "It’s going to determine your interest rate, and terms of your home.”

Abshire, who also holds a seat on the Calcasieu Parish Police Jury, said that a good score is typically 700 and up, and a great score is anything above 720.

“You want to be sure that you’re making your payments on time, and keeping an eye on your credit, to be sure there’s no fraudulent activity going on,” Abshire said.

If you do miss a payment, or don’t know that you owe something, that debt can be turned over to a collection agency.

Your hard-earned credit score can take a hit, and you might not know where to turn to fix it.

Abshire said the first step is to pull a credit report, which you can do for free once a year through any of the three credit reporting agencies: Equifax, Experian and TransUnion.

Credit Karma recommends gathering all the facts from the collection agency before making any payments.

That can include to whom you owe the money and what exactly it’s for.

Even if you’re able to pay the full balance, that doesn’t automatically mean it will come off your credit score.

According to The Balance, sometimes it can continue to effect your score for another seven years.

Before making a payment, ask the collection agency for an agreement in writing that will be removed if you pay it off in full.

At the end of the day, credit may seem scary, or like too much of a risk.

However, Abshire says it’s important to have built up good credit in today’s society.

“Just being sure that you have some sort of credit with payment history is what’s going to drive your credit score," Abshire said. "So a car loan, a mortgage, a credit card is not necessarily bad, as long as it’s managed well.”

Copyright 2019 KPLC. All rights reserved.