Debt collection agency are the companies used by lenders to recover their debts that are sue from past. After attempting all the tricks and failed in getting their money back. A lender contacts a debt collection agency.
Debt collectors are those who collect the credit money from the borrowers. Debt means borrowing the money from lenders and [pay-off the money with some interest or tax after a given time.
The proper use of debt is a part of financial strategy. It helps you to enjoy those things which are out of your reach. Borrowing money also has a bad side. The wrong kind of debts which are too expensive can make you feel like living in hell.
Strategies of borrowing a debt
Borrowing pays money. It is necessarily not bad if returned back on time, but you have to pay extra than you had borrowed. Here are some good strategies:-
- You should know that what amount you have to borrow and when. Borrow debt for those things which provides a long term value rather than limited enjoyment.
- Before borrowing, make sure that you are able to repay all the money with additional charges on time.
- Periodically review the debt
At the time of issuing loan, you credit record plays an important role. Having a good credit is important while applying for a loan. Lenders always order the credit report before issuing the debt. Ant it will decide that additional charges applied. If you have a good credit, the lender will charge you less extra money.
What lenders are looking for?
- You employment record
- Stable residence
- Responsible handling of other debts
- Debt to income ratio
How the debt collection agencies work
When a borrower fails to make payments on time then lenders will report to credit bureau. It will not only tarnished borrowers credit history but also collection agency turn over it within 3 to 6 months.
When a borrower pays – if he will pay by the efforts of debt collection agency then the lender has to pay some percent of debt to the agency.
When borrower doesn’t pay – the debt collection agency updates the credit score of the browser with collection status. This will bring the credit scores down &borrower has to face problems.
What are the strategies used by a collection agency
- Calling the borrower multiple times on personal or office phone.
- Mail late – payment notices again & again
- Contact debtors neighbours, friends, family to confirm borrower’s contact information
- Appear at the debtor’s front door