If you’ve ever been denied a new credit card or loan because of a problem or error on your credit report, then you know credit surprises can be costly. If your credit report reflects a false or incorrect collection account balance from Covington Credit or a similar business, you can take steps to remove it.
Covington Credit is a financial services provider whose business includes offering loans to people who don’t typically qualify for most types of credit. It’s not a third-party debt collection agency, but it does collect on its own debt.
Covington Credit is a real business that lends money through Southern Finance and QuickCredit. It’s a subsidiary of Southern Management Corporation and is affiliated with Heights Finance, which has a Better Business Bureau rating of A+ (the highest rating the BBB provides).
Covington Credit is part of the MyMoneyToGo group of companies. It has an online presence as well as more than 300 branches across Alabama, Georgia, Oklahoma, South Carolina, Tennessee and Texas.
MyMoneyToGo also offers refinance services and credit insurance. It does not offer credit card services.
For its locations in Dallas, Texas, the company is included on a website that lists Dallas-area lenders offering emergency loans, alongside several payday loan companies, pawnshops and car title lenders.
Although it doesn’t fall into any of those categories, Covington Credit offers personal loans to individuals who face emergencies ranging from medical bills to auto repairs, as well as other “unexpected expenses” and “life events.” The company makes fixed-rate loans of between $300 and $1,400, offering “cash in a flash.”
As with other companies offering emergency loans, Covington’s interest rates tend to be high, making it difficult for some borrowers to repay them. This can set up an unfortunate chain reaction.
First, missing a payment on a loan you took out with Covington will trigger a late fee. Once it’s gone unpaid for more than 30 days, this missed payment will likely show up on your credit report. (If you did take a loan out from this company, the collection agency name will show up as Covington Credit Collection.)
Although Covington Credit isn’t a collection agency, it does collect on the loans it makes to its customers. Many companies hire third-party collection agencies to recoup their debt, or they may sell that debt to an agency after a certain period, once the debt has become a charge-off.
Covington Credit, by contrast, acts directly to collect debts it believes are owed. In effect, the company serves as both the original creditor and its own debt collector.
If you took out a loan and didn’t pay it off within the specified time period, your credit report likely will reflect your collections account, listing Covington Credit as the collection agency.
If you’re 30 days late on a payment, most lenders (including Covington) will report that late payment to the credit bureaus as delinquent.
Verify the validity of your collection account by requesting a copy of each of your credit reports from the three major credit bureaus (Equifax, Experian and TransUnion). You can get a free copy once a year at annualcreditreport.com to keep an eye on your credit.
Once you’ve received all of your credit reports, you can review them to assess their accuracy. If you see a collections account payable with Covington Credit, first verify whether the item is valid and the debt balance is accurate.
After you’ve obtained your credit reports and reviewed the outstanding item, the next step is to request a debt validation letter from Covington Credit to see the documentation on the status of the debt claim they have against you.
Under the Fair Debt Collection Practices Act (FDCPA), collectors are required to send you a debt validation notice within five days of their first contact with you. This letter should include the date that the debt turned delinquent as well as all information that connects the debt to you.
If the validation letter does prove that you owe the debt listed, you can offer to negotiate a settlement or installment plan to close the collection account.
Alternatively, you could negotiate a pay for delete arrangement. In this situation, you establish an agreed-upon amount that you’re able to pay in exchange for having the item removed from your credit report.
Without such a deletion, even after you pay off your collection account, the debt can remain on your credit report for seven years from the original date from when the account became delinquent.
Still, closing a collection account through a negotiated settlement is better than leaving it unpaid and open, just waiting for it to drop off your credit record.
But say the debt validation letter doesn’t prove that you owe the debt, or the company does not provide you with proof of debt. Then you can write a dispute letter to Covington Credit and the three major credit reporting agencies. Submit with the letter any evidence that you don’t owe the debt and request that the collection be removed from your credit report.
Upon receiving the validation letter, you have 30 days to send a dispute letter with specific information about your grounds for disputing the debt. The Federal Trade Commission offers a sample dispute letter online that you can use as a template.
The Better Business Bureau lists 87 complaints against Covington Credit on its website.
The BBB also says the complaints on its website might not represent all those filed with the bureau, because some consumers may not wish to publish the details of their complaints. They also may not meet BBB’s standards for publication or only a portion of complaints may be displayed if a high volume is received.
The complaints on the BBB website range from a complaint about late fees to one about receiving “live checks” for $725 at 95% interest. The company responds to these complaints with explanations and supplies additional responses if the customer maintains the initial reply did not resolve the complaint.
Collection agencies, major credit reporting agencies and financial institutions can all make mistakes and claim a consumer is responsible for a debt that may not be accurate. Errors on credit reports can occur through inaccurate reporting, identity theft, or confusing the details of two individuals or accounts.
Take advantage of the fact that you can get a free credit report annually. It’s important to check your credit reports frequently to avoid any misunderstandings and to set the record straight when it comes to your credit score and other information.
Debt collection limitations are set by the Federal Trade Commission and Fair Debt Collection Practices Act.
The act prohibits bill collectors from, among other things, engaging in harassment, threatening actions they don’t intend to take, making false representations (such as pretending to be a law firm), using obscene language, or publishing your name on a list of alleged debtors.
If you aren’t comfortable dealing with Covington Credit yourself, you can always speak with a credit repair company. But don’t accept offers to remove accurate information from your credit record. No credit repair company can do that.
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