Why Should You Never Pay a Collection Agency?
A debt collector or collection agency collects overdue debts, whether from lenders, credit card companies, hospitals, or educational institutions. Anyone you owe money to and haven’t repaid in a timely manner, may use a collection agency to collect the money you owe them. While collection agencies are legal, it’s always better to repay the entity you owe the money to directly.
Why You Should Avoid Paying a Collection Agency
Collection agencies purchase debt. In order to get their money back, they try to collect the money from you. While paying them gets them to stop calling you and sending you notices, it doesn’t reflect on your credit history. Meaning, your credit history will show that you are in debt or have a default, but it won’t show that you paid off the debt or default. Debts and defaults take seven years to come off your credit report. You can still get a home loan with debts and defaults on your credit history, but you’re more likely to be approved if your credit report shows you repaid the debt or settled the default, which only happens if you pay the company you owe money to directly.
It may seem counterintuitive, but you should never pay a collection agency. Instead, try to work out a repayment plan with the original lender, credit card company, or whoever you owe the debt to.
If you have debts or defaults, the specialists at Mortgage House can help you refinance or consolidate your debt allowing you to get back on track financially.