Tips from the FTC—Debt Collection

If you have been late with your credit payments, that’s one thing.

But once you're referred to collection it's up to the collection agencies to report that you have a collections account, both to you and to the three major credit reporting companies. Being placed in collection is more negative than just being late on payments, according to Rebecca Kuehn, assistant director of the Division of Privacy and Protection for the Federal Trade Commission.

One partial solution is to attempt to put a brief “consumer note of explanation” on your report explaining this uncharacteristic lapse. It won't change your score, but if an actual human being is reviewing your credit application, he or she will see it and can consider it when making a decision about doing business with you.

How to file a dispute: To file a dispute note with the three major credit reporting companies, visit their Web sites and download the appropriate document. Each credit reporting company has various methods to file a dispute by mail, by email and even over the phone. Then, follow up in 30 to 60 days to make sure that they posted it.

Tip: Pay off past-due accounts. Don't expect the inactive status to make this negative mark fall off your report any faster, according to the FTC. It can stay on your credit report for four to seven years.