Managing Your Credit After the Military: How Collections Impact Your Credit Report
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If you didn’t give much thought to your credit while you were in the military and have recently been discharged, now is the time. If you don’t take care to manage your credit adequately, your accounts could go into collections and that is something you definitely want to avoid.
How Does An Account Go Into Collections?When you have missed payments on a credit card or loan for several months, you are considered delinquent. If you are delinquent for long enough, the company may charge off your debt to a collections agency. From then on, the responsibility for collecting the debt belongs to the collection agency.
What Are The Consequences For Letting An Account Go Into Collections?For one thing, you may be subject to consistent and harassing phone calls from the agents of the collection company looking to collect on your debt. More importantly, a charge off goes onto your credit report as a negative mark, making it more difficult for you to acquire loans or credit in the future.
How Can You Prevent Accounts From Going Into CollectionsThe easy way to make sure your accounts don’t go into collections is to pay your debts. Make sure to pay at least the minimum payment for each credit card or loan you have each month. If you can pay more, great, but make sure to pay something. If you cannot manage the minimum payments, do not just ignore them. Contact your lender and explain to them your financial situation. Lending agencies can be very understanding about financial difficulties, especially for those men and women who have served in our armed forces. If you explain your situation to them, they may be able to work out a deal where you will be responsible for affordable payments without having your credit affected adversely.
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