Note: The DearEsq free 'ask a lawyer' site is offered as a free informational service to the public and is not intended as legal advice. Laws vary from state-to-state, and in addition every situation is unique, and relevant facts may not be known. The answer to the question posed below may not apply to in your state or to your situation. For legal advice in your state and your situation you should consult with an attorney in your state who is familiar with the rules and laws in your state.
“I have a customer that has two accounts being reported on her credit report that are in collection. Both accounts were “sold” or “transferred” to a collection agency. The original creditors continue to report the accounts as collections along with the collection agencies reporting them in the same manner. It appears that there are four collection accounts rather than two. By reporting the same two accounts four times, her credit “score” has been pulled down to the point that she cannot qualify for the home loan she is seeking.
It strikes me as very unjust that creditors can report collection accounts in this manner on a credit report. When contacted, the credit bureau told me that a creditor can “sell” or transfer an account as many times as they choose and every time it will appear as another collection. For example, if I owe ABC Company $100.00 and the account goes to collection, ABC Company can report that information to the credit bureaus. At a later date, they “sell” or transfer the account to XYZ Collections and XYZ Collection can report the account as a collection to the credit bureaus. In the meantime, ABC Company can continue to report the same debt to the credit bureaus as well. This then appears on the credit report as a $100.00 collection account owed by me to ABC Company AND another $100.00 owed to XYZ Collection for the exact same debt. In fact the only debt I have would be $100.00 and not two different collections for a total of $200.00. According the credit bureau, a creditor can “sell” or transfer the account over and over which would result in the same exact debt being reported 4, 5, 6, or more times further damaging my credit and credit score. As I said, it just doesn’t seem fair or even legal.
What, if anything, can I suggest my customer do to resolve this problem and get her credit score increased or is she out of options?”
This is the reason that it is critical to work with a bank that knows you and has the ability to actually look at the report, see the reality, and make lending decisions based on that reality. Of course, in this day and age of impersonal banking that is getting harder to find!
Question: Your customer has a few options, including paying off that original debt. She should also take advantage of her legal right to get a free credit report, and dispute those duplicative entries, to get them off her report. You can now get free credit reports online.In either case, she should work on paying off the original debt, as that will make her position even stronger when she disputes the listings on her credit report.
Answer:
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