As a small business owner, chances are that you have to deal with customers who do not pay on time. It can be frustrating when clients take advantage of your company’s good credit rating, which can lead to bad credit scores for small businesses. As a result, many small business owners have turned to credit bureaus in order to get their money back from customers who have failed to pay them on time.
Can I Report a Nonpayment to the Credit Bureaus Directly?
You can choose The Credit App, which allows a smarter way to collect nonpayments.
What is Credit App, and how does it work?
TheCreditApp.org is a credit bureau reporting service (similar to filing a lien). It indicated to other lenders that this borrower may not be a good credit risk. The mark will remain on their record for 7 years unless they pay you off or the loan expires.
To begin with, upload the information and documents of the customer that is in default. Pay a small fee. A debtor will receive a personalized notice via email and text, notifying them of the non-payment.
Default customers will get a notification to pay you directly to prevent the negative credit mark from going on their records. If no payment has been made by the end of the two-week grace period, we will report your debt to credit bureaus with our company name as a creditor.
How can I check credit reports?
You can request your Free Credit Report Online by Visiting AnnualCreditReport.com. By any chance, if your request for a Free Credit Report is rejected, get in touch with the CRA directly to try to resolve the issue.
While it may sound similar to credit card companies or banks, they are not. The three major reporting agencies are Equifax, Experian and TransUnion.
The bureau will send out letters to the delinquent accounts (usually seven) and then send out another letter if no response is received after 30 days.
If a response is still not received after 45 days, then the information will be placed on a negative report which could affect their ability to get loans for cars or homes in the future.
Below are step-by-step processes you can follow.
1. Request payment from the customer
- Make sure you have a copy of your contract with them; it’s helpful for proof and for writing up letters. If you don’t have one, ask them to send it to you or include this request in your letter.
- If they respond with excuses, try to get them engaged in resolving the problem: “I’m sorry that this happened, but we can figure out how best to move forward together.
- Still if does not pay after sending reminders and following up on those reminders, consider taking further action.
2. Send dispute letters to credit bureaus
If you’re trying to collect money from a customer who has refused to pay their invoice, the next step is a dispute letter.
A dispute letter should be sent to both the creditor (the person or company you are owed money by) and the credit bureaus. Include all of the following:
- A copy of your original invoice reminding them that they owe you money
- Copy of any payment receipts or other documentation that shows that they have not paid
- Duplicate your contract with them
- Any other supporting documentation
3. File for a judgment in small claims court
Once you’ve completed the steps above, it’s time to file your lawsuit in small claims court. You can do this by following these three simple steps:
- File a complaint with the court and pay the filing fee. The filing fee varies depending on where you live, but it should be at least $50 and might be as much as $400.
- Serve your complaint on the defendant (the person you’re suing).
- Wait for a judgment against them after they’ve had their day in court.
- The judge will decide whether or not they owe you money based on what happened during your hearing.
- If he or she grants your request for payment, then you’ll get an official copy of this decision mailed to both parties’ attorneys of record about 30 days later.
4. Hire a collection agency to collect your debt
There are two types of debt collection agencies: private and public. The main difference is that public agencies are regulated by law, while private ones aren’t usually subject to any regulations or oversight at all.
This means that if you choose a private agency over one that’s part of your state or country’s government, there may be fewer protections in place should something go wrong with your case.
Choose carefully!
Hiring a debt collection agency can save time and money. However, before hiring a collection agency, make sure they’re not just going to harass you on the phone (which could actually damage your credit score further) or take illegal actions like forging checks from your bank account without permission.
If possible, talk with other people who have worked with this specific company before signing up for its services; this will give you more insight into its staff members’ personalities and how much effort they put into helping each client succeed in getting paid back for their debts.
5. Sell your debt to a collection agency
If you can’t get paid yourself or if you don’t want to be involved in collecting the debt on your own, consider selling your debt to a collection company. This is often seen as a last resort because it’s expensive and time-consuming for both the debtor and collector. But if this is what needs to happen for you to get paid, then it’s worth considering.
The best way for consumers to manage their debts is not by selling them off but by paying them off themselves. If a consumer wants more help managing their debt load, they might want to think about using an online tool like Mint or Credit Karma that tracks their finances and provides suggestions based on their spending habits.
Can business owners report to credit bureaus?
If you are a small business owner and have been having trouble collecting payments from clients, The Credit App — a credit bureaus reporting can be a cheap and effective tool. Check it out here.
Final Thought
If you have tried all of these options and still can’t get your money, then it might be time to consider selling off your debt. You can also hire a collection agency that will work on your behalf. It’s important to note that this process could take several weeks or months before it is resolved.
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