Talking With A Creditor: 5 Steps Of The Negotiation Cycle
By Myles Johnstone
1. Contact the creditor by phone and reach a tentative agreement.
2. Send the creditor a settlement agreement, requesting return of a signed copy.
3. Upon receipt of a signed copy, send a money order marked "Full Payment."
4. Order a credit report from the credit bureau to ensure the item is changed or deleted as agreed.
5. If your credit report is unchanged, send the creditor a letter demanding compliance with the agreement.
Your bargaining power in this technique is your willingness to repay your creditor the money that you owe him. If the account has already been charged off or discharged in bankruptcy, your leverage will be even greater. At this point, the creditor has already accepted a loss on your account, and he does not expect to ever see or hear from you again. When he hears that you are now willing to repay the debt (or even a percentage of the debt), he'll be anxious to work with you.
You should expect to repay your creditor from 70 percent to the full amount to have it removed or to change the negative credit rating. However, if you expect to settle at 70 percent or less, you should start by offering around 40 percent. You will also lose some of your bargaining power if the balance on the account is under $200, as the creditor may not even want to waste his time with it.
In many cases, the initial person with whom you begin negotiating does not have the authority to enter into a settlement agreement, especially since it involves changing your credit rating. It is important, therefore, that you talk directly to someone who is in a position to authorize the final agreement.
Another obstacle you may face is that many of these collection officers will tell you that it is impossible (or illegal) to change your credit rating. Therefore, it is often necessary for you to explain to them what you want and how it can be done. The creditor can use the following methods to change or delete credit information on your file:
* All creditors who subscribe to one of the major credit bureaus use a nine-track computerized magnetic tape to report their clients' payment histories. They send this tape to the bureau on a monthly basis. Therefore, you can request that they change the information on this tape after they receive your payment. You may also ask them to delete the account from the tape.
* The creditor can also "bull's-eye" your account. This is an instant method of credit file correction, which is accomplished through the creditor's computer link to the credit bureau. The creditor has the capacity to pull up your account on the computer and make the necessary change automatically. By using a change of information slip, the authorized person can send the corrected information to the data acquisition department of the credit bureau and your file will be updated.
* The creditor can also change the information by submitting a manual update form to the consumer relations department of the credit bureau. With this method, the creditor can delete negative information but cannot change the rating from negative to positive.
About the Author
Myles Johnstone writes exclusively for finance related sites such as Refinancing Finance Info.com, Vehicle Finance Info.com and finance Solutions info.com where he writes about credit repair
Source: Top Finance Articles
NOTE: You may only use this article if the source, author details and links remain and are kept active. We use copyscape and other similar tools to ensure our content has this information with the article.
Below are some Credit Debt Repair articles:
4 Ways To Help Boost Your Credit Score
5 Questions You Must Ask A Credit Counseling Service Before Deciding
8 Solid Tips When Applying For Credit Cards
A List Of Rights You Have Against Debt Collectors (Part 1)
A List Of Rights You Have Against Debt Collectors (Part 2)
A List Of Rights You Have Against Debt Collectors (Part 3)
All Women Need To Read This - Understanding The Equal Credit Opportunity Act
Applying For A Credit Card - Check Out These 5 Comparison Shopping Tips
Are You A High Risk Or Low Risk Credit Applican - Understanding Your FICA Score
Are You Unemployed - Learn The Smart Way To Utilize Your Credit & Your Cash
Benefits Of A Debt-Management Plan
Benefits Of Working With A Credit Counseling Agency (Part 1)
Benefits Of Working With A Credit Counseling Agency (Part 2)
Cleaning Up Your Credit, Without Paying
Disputing With Credit Bureaus - Know Your Rights
Filing For Bankruptcy - Which Plan Is Right For You
Financial Records - Create An Effective Filing System
How Being Frugal Can Help You Gain Financial Independence
How Identity Theft Can Crash In Innocent Person's Credit
How To Build Credit In Your Own Name After A Divorce
Innovis - The Credit Report You've Probably Never Heard Of
It's Tough To Save Money When You Are Already Broke – But You Can Do It!
Learn How To Have Your Student Loans Canceled
Learn How To Read Your Credit Report
Myth - Closing Credit Accounts Will Help Your Score
Questionnaire To Determine If Your Future Spouse Is Financially Compatible
Relationships & Money - Research Your Partner's Debts Before Making Big Choices
Saving Money & Becoming Debt-Free Requires Deep Changes
Staying Out Of Debt With The IRS At Tax-Time
Talking With A Creditor - 5 Steps Of The Negotiation Cycle
The Benefits Of Keeping An Open Checking Account
The Importance Of Keeping Good Financial Records
The Shocking Truth Behind Credit Report Inaccuracies
Ways To Get Out Of Debt & Save Money (Part 1)
Ways To Get Out Of Debt & Save Money (Part 2)
Ways To Get Out Of Debt & Save Money (Part 3)
What Are Rapid Rescoring Services & How Can They Help My Credit
What To Do When There Is A Bank Error In Credit Reporting
What's The Best Time To Negotiate With Creditors
Why Do So Many Adults Have A Hard Time Managing Their Money
A few shorter credit/debt repair articles:
2 Reasons Why Big-Ticket Purchases Can Help Your Credit
3 Additional Ways Of Adding Positive Information To Your Credit File
3 Of The Biggest Credit Repair Mistakes You Must Avoid
3 Ways To Protect Yourself From Credit Card Fraud
6 Ways To Protect Your Social Security Number
11 Ways Your Identity Can Be Stolen
Applying for Credit Cards With No Credit History
Are Retail Stores Risking Your Credit Card Numbers
Discipline Yourself When It Comes To Spending Money
Having No Credit Is Worse Than Having Bad Credit
Learn How To Stop Collection Agencies From Harassing You
More Reasons Not To Close Older Open Credit Accounts
Timing Is Important When Negotiating A Settlement With The Bank
Tips To Help You Negotiate With A Creditor
Using Local Merchants To Help Get Good Marks On Your Credit Report
What Marks Should I Accept On My File From A Creditor?