I look at credit reports too often and find a small problem people run into. The problem is individuals make partial payment arrangements with their creditors with the impression it will not affect their credit report. This is simply not true; the creditor will typically report that payment 30 days late to the credit bureaus. The reason is you are actually late on the remainder balance owed. I am not sure where the information gets crossed but most are under the impression that since they called in to the creditor to make a partial payment arrangement it will not affect their credit at all.

If you find yourself in some kind of financial obstacle you should call your creditors if you are having trouble paying them instead of not calling them at all. Just remember just because you set up a payment arrangement, that does not mean your credit will not be affected by it. When making these types of arrangements ask the creditor and get it in writing that they will not report any 30 day late payments to the credit bureaus. Obviously once you get back on your feet make sure you catch everything back up.

Typically if you are in a partial payment arrangement with a creditor they might report that arrangement to the bureaus. Your credit should not suffer too much as long as they don’t report any late payments. The partial payment arrangement could affect your chances of getting some loans, because it may look as though you are having financial problems. One late payment will drop your credit score around 150 points. Once that damage is done it may take years to recover.

Now it’s better to make a payment arrangement vs. allowing the debt to go to collection if the creditor is willing to work with you and put the agreement in writing.

I hope this information was helpful, and make it a little clearer that just because you have made a partial payment arrangement on a debt does not mean the creditor will not report late payments to the credit bureaus. Before any arrangement make sure you get everything in writing.

CreditScoreQuick.com

This entry was posted on Monday, November 17th, 2008 at 8:59 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.