subject: Know About the New Threat to Your Credit Score [print this page] Know About the New Threat to Your Credit Score
Credit card debt has already taken a toll on our personal financial system with the consumers defaulting on the interest rates and other hidden charges. As a result, debt relief companies have come to a helpful forefront with their various services like credit card counseling, debt consolidation loans and debt settlement etc. to help people reduce their debts and repay them to the creditors in order to safeguard their credit score from negative markings and blemishes of late or non-payment, bankruptcy, foreclosure and so on. In a quest to keep our future financial endeavors safe and active, we must keep our credit report free of unwanted and negative remarks and comments, which until we knew was done by either creditors or collectors. But not all of us knew that our credit score can suffer from even an unpaid ticket, an ignored traffic fine, car parking charges or a forgotten library book! Shocking it may sound to many of you, but the fact is true. Most people know, and can accept, that an unpaid credit card bill can wind up in a collections account that will devastate their credit scores; but most of us do not know that a growing number of local and state agencies are using private collection agencies to boost their revenues. For instance, more than numerous public libraries in many U.S. states turn unpaid accounts over to private collectors like Unique Management Services, while cities and courts hire others, like municipal Services Bureau, to track down overdue parking, traffic and court fines from people who avoided the payments.
Later many collection agencies quickly report these outstanding and overdue accounts to at least one of the three major credit bureaus and the following negative blemishes send the consumers' credit scores tumbling with troubles. Thus every consumer should be aware before evading any sort of fee or charge or fine to a phone company, a health club, a local library, or an insurer, lest the same can turn up to the collection agency followed by the black marks on their credit report. This latest situation has made the consumer advocates voice their disagreements and question the fairness of allowing collection actions to taint people's credit histories, which have nothing to do with how they handle credit. These undue and unjustified privileges of such agencies are making it more difficult for the consumers to ward off their financial worries even in the absence of any cases of debts or dues. The same is keeping the lenders from differentiating between an able and potential borrower from an irresponsible one as they rely heavily on credit scores. They could be rejecting an otherwise reliable and profitable client because of his default risk. Those with thinner or more troubled credit histories can easily find that a single collection action prevents them from getting loans, or forces them to pay higher interest rates. That's not the end of the financial effects, either, since insurers, landlords and employers also use credit information to evaluate applicants
