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There are three major credit bureaus which are TransUnion, Experian and Equifax.

When you are slow in making payments, debt collectors have various ways of scaring you into making payments. Some of them threaten to make sure that the delayed payments get reflected within your credit report. Although this is very possible, it can only be done under various situations. You can avoid bad debt from appearing in your credit history if you have knowledge of how the debt collectors work with the credit bureaus.

The major function of the credit bureau is to collect information that will be useful in the assessment of your credibility when applying for a loan. The information availed to the financing institution is both financial and demographic in nature. The information is compiled together to create a credit report. This report is available to a number of financial institutions and other service providers at a certain fee. This information is useful in determining an applicant’s credibility since it is always updated.

A collection agency on the other hand is charged with the task of collecting money from the debtors. Some of the collectors are usually working on behalf of your financier. There are those collectors who make a living from the purchase of debts at lower prices and then go on to claim the full value of the debt from the debtor. Collectors will go to any lengths to ensure that you pay off your debts. Some even go to the extent of notifying the bureaus of your delayed payments. Such reports are usually included in the collection account and they will definitely lower your credit score.

Every time you incur bad debts, they will appear on your credit record for duration of seven years. After the seven years are over, your records should not have the bad debts showing. In the event that a bad debt is not removed from your credit record, you are authorized to ask the bureau to make sure that it is removed from your credit.

The only time that a debt collector is allowed to report bad debts is only if the debt is legitimate. If the debt is legitimate, then it will be included in your credit history. If a debt cannot be validated, you are free to dispute it. This can lead to the removal of such debt from your credit records.