Paying off a due obligation with a debt collector generates a feeling of accomplishment because you are truly removing a stressful financial burden from your life. You will not receive calls or letters anymore, plus you´ve found a new level of responsibility by taking care of a debt.
The next stage involves healing your credit score little by little. Remember that clearing debt will open doors for much larger financial commitments, such as mortgages or a car loan. It is important to know that once you pay off the debt, it doesn’t mean that your credit score is healthy and able to get you finance. Here are a few additional steps that must be followed to ensure that indeed the debt is paid off and all its effect diminished.
Check with the original creditor that the payment cleared
If the debt you paid was with a financial institution, you must verify with them that the payment went through and always keep a copy of all these records from the bank. Also, keep proof of whichever method you used to make the payment – check, credit card or bank transfer – and make sure that the collection agency gives you a file number that shows that the payment was made.
This is to future-proof yourself in case you need to prove that the payment was made and also it will prevent any dishonest agency from attempting to make you believe that you owe money so they can collect the debt again. Having records of your payments is a good practice and it will work in case you need to show another lender that the debt was paid off in order to access a major loan.
Verify your credit report
The next step is checking with credit bureaus your credit score, for this, you should wait at least three weeks so you can be certain that the payment went through so it shows zero balance. If the credit report still shows that you owe money then you can back up your claim with the bank statements you collected in the previous step.
You should contact the collection agency if for some reason they haven’t removed the collection account. Remember that debt collectors are not really obliged by law to remove these records, so make sure you´re on the same page as the debt collection agency to avoid a misunderstanding or an event that has a negative impact for your interests.
Have a copy of the settlement agreement handy
It has happened before that people think that they made a successful settlement agreement only to be contacted later by another agency collecting an unexpected remaining balance. This means that if you are already doing business with a debt collection agency, you must ensure that you get a signed document and make sure they also keep one for your records.
Three simple steps that you should follow after you pay off debt to make sure that it will be the last time you hear about that particular debt. By following those guidelines you can have the doors open with lenders in order to access other major loans. Keep in mind that sometimes debt collection agencies sell their paid collections to other third party agencies, who are looking to trick you into paying something you already paid.
If you´re looking for ways to boost your earnings and savings to pay off an outstanding debt with an agency, you can check if you were negatively affected by the PPI scandal. Many people were tricked into purchasing payment protection policies that were not necessary.
It’s important to be aware that simply paying the debt off via a debt collector doesn’t just mean that’s the end. You’ve got to ensure your financial security by making sure you have proof and referenced account numbers to show if queried in the future that a payment was made.
Unfortunately, it’s common for individuals to forget about the debt and not cover themselves for the future. However, make sure that you’re fully prepared if questioned or contacted in the future. It’s a step in the right direction to becoming more financially independent and trustworthy.