The Fear of Ruined Credit

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Jun 4

The Fear of Ruined Credit

Know More: Creating a Credit Policy, Credit Reporting, Debt Collection Letters, I have past due customers, what do I do?, Understanding Credit Reports, Using Collection Agenices

The use of credit reporting to persuade a debtor or past due customer to pay you only work for immediate payment if the customer cares about their credit. Some customers will laugh when you mention their credit report and don't care if you report the debt. Even if this happens to you, you have to let them know that this could happen if they don't pay.

You should always report past due amounts on all debtors even if they don't care, because at some point they may care. Maybe when they try to get an auto loan in a few years.

When I owned my collection agency I did collections for landlords from students. Most of the students did not pay and some of their parents would call me after the third letter and pay off the balance with a credit card. Some students made payments but they were sporadic.
I reported some of these debts to the credit bureau and when these students graduated and tried to buy a car, or a house, or rent a hall to get married, they had this bill on their credit report. I would get frantic calls from them and they would always pay in full so they could get a letter that it had been paid and their loan could go through.

So you see, it is worth reporting the debt because you can get paid even if it is years later.

Keep in mind that when you do credit reporting, you can also report prompt and good payments for your other customers as well. Let them know that you appreciate their paying on time and have reported this to their credit report. It is like getting a good grade on your report card.

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