xitqdzppmvn

Credit ratings are based on your credit report. When a financial institution - a bank, credit card company, or another type of company - loans you money, they will report to an agency how well you are keeping up with your payments. If you are keeping up with your payments, all is well. If not, then negative feedback is given to the agency and may stay on your credit report up to seven years.

However, before a financial institution will report to an agency, they will make an effort to contact you to help you get caught up on your payments. If you respond and get back on track, they will monitor you more closely, but it is possible that they will not report you to the credit agency. However, if you do not respond to their warnings, the financial institution will sell your debt to a collection agency. This is called "writing off the loan." The collection will purchase the bad debt at a cost lower than the amount due. It is better for the financial institution to get some of the money as opposed to none at all. When this happens, the financial institution reports this to the credit bureau, and you will be given the lowest possible rating on your credit report.

It is vital that you try to avoid this "writing off" of your debt. If you are at the point that your debt is in the hands of a collection agency, it is imperative that you respond as soon as you have been contacted by the collection agency. All is not lost at this point. Before making payment arrangements with the collection agency try calling the creditor one more time. In many cases, if you agree to pay the full amount immediately, they will remove the "gone to collection" mark from your credit repair. This is a key ingredient to fix poor credit.

If the creditor is unwilling to do this, you have no choice but to work with the collection agency. Keep in mind that at this point, your credit rating can not get any lower. You have no where to go but up--provided you are diligent in trying to fix your poor credit. Just a warning here. The collection will be very aggressive to collect the debt, often demanding that the amount be paid in full, even implying that they will take you to court if you do not.

One thing that you may not know about collection agencies is that they probably bought your debt at about half its value, so any payment over that is a profit for them. Try to come to terms as quickly as possible, even arranging to make a lump sum payment if you can arrange it. Their goal is to recoup their money, make a little profit, and close the case so they can move on and not drag things out.

Just a reminder, always try to deal with the creditor holding your debt FIRST. If things have progressed to the point of a collection agency, don't ignore their calls, but work on a payment plan as quickly as possible.

To Blast Your Credit Score Through the Roof and Fix Poor Credit, and for this article's Part 1 or Part 2, please visit this credit information site: http://www.squidoo.com/fix-poor-credit/