Credit Check Collection Agency

April 1st, 2021 by dayat Leave a reply »

What is a credit check collection agency?

A credit check collection agency provides a service that can help determine the credit worthiness of you the potential consumer. These collection agencies verify whether a potential consumer qualifies for a loan, or any other credit, based on whether he or she has repaid their past debts or loans satisfactorily. At this point your credit score is pulled and then used by banks and any other lending company to qualify and possibly estimate how risky you the borrower may be based on previous experiences based on your debt and credit. In other words, a credit report is a true reflection of your past credit history. Your credit score is pulled by each of the three consumer reporting companies in the U.S.: Equifax, Experian, and TransUnion and these are monitored by the Fair Credit Reporting Act (FCRA). Many credit check collection agencies provide services to many establishments such as auto financiers, banks, credit card companies and retailers to name a few so by doing this these companies allow for a smoother process of allowing those with minimal debts to establish new lines of credit and easier and faster approval times.

Credit check collection agencies also provide other services that help collect debts for the creditors that are delinquent. These agencies are commonly known as debt collection agencies due to the nature of the collection process but still fall under the credit check collection agency regulations. These types of debts range from auto loans to credit cards to mortgage payments. By outsourcing the credit collection process allows the creditor to pass off the debt and liability to an agency that is better equipped to recover these bad debts from the consumer. The bad debt account is evaluated and the creditor pays an up front sum to the collection agency and the liability of the debts is then passed on for future collection. At this point the collection agency arranges for repayment of moneys owed by a person or another company to another person or company. Credit check collection agencies or debt collection agencies are all regulated by the Collection Agencies Act so whether you use one type of agency name or another as a personal preference, these agencies are all governed by this same act.

Many lenders use credit check collection agencies for various reasons:

They are too small of an organization to have their own collection departments
They lack the complete collection expertise to collect payments
They want faster results
They just want to protect their images

These credit check collection agencies are third party organizations that help lenders to obtain repayment faster and in easier ways so they can acquire there debts that they have paid for up front in the whole retrieval process. The usual collection tactics used by a collection agency to recover payments are to initially send collection letters, make phone calls, notify credit reporting bureaus such as Equifax, Experian, or TransUnion, and eventually litigation if none of the other tactics work during the collection process. Some collection agencies have resorted to violence but such practices are unlawful and are regulated by the Fair Debt Collection Practices Act. This act gives a list of what a collection agency can and cannot do.


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