Collections, charge-offs, and late payments are a three-headed monster that can really ruin someone’s credit. That’s what Crystal S. was dealing with when she came to CredEvolv for help with her 510 credit score.
We connected her with a certified, nonprofit credit counselor. In seven months, the counselor was able to remove a collection account, a charge off, and seven late payments from her credit report. Crystal’s 510 credit score rocketed to 608!
Late payments are self-explanatory. As for how the other two can contribute to a 510 credit score:
What are collections and charge-offs on a credit report?
- A collections account occurs if you fall behind on your payments. The lender or creditor can choose to transfer your account to a collection agency. They also have the option of selling it to a debt buyer. This can occur anytime from the date you begin missing payments or not paying the full minimum payment to a few months after you become delinquent. Lenders and creditors will usually send you letters or call you regarding the debt before they involve a collection agency.
- A charge-off is an accounting term that indicates the creditor doesn’t think you’ll pay back the debt. Even though the creditor has written the debt off and has stopped attempting to collect the debt themselves, a collections agency may have purchased the debt. If so, that agency may attempt to collect what you owe. This can include the outstanding balance and any interest that has accrued.
Now that Crystal’s original 510 credit score is on the rise, she’s in a better position to achieve her financial goals. She also has more knowledge about credit so she can hopefully avoid the pitfalls of borrowing in the future!
Read more credit success stories here.