While working on my bank financing for the property we want to purchase we discovered a collection item on our credit report - for a whopping $122. No information, just a current collection against us for some medical treatment.
We never received a bill, we never received any notices, and we have no idea what it is - but it is there in our credit report, it hurts our credit score, and it could negatively impact our lending rate.
I called the collections agency that is listed in the report. They claims that they have been sending us mail since May 2005, they have no explanation for the charges, just that we owe Group Health $122.
Here is the kicker - we never ever use Group Health, and the notices they have been sending to us have been sent to our old address, not to the current address listed on the same credit report that the agency used.
How can they get away with this? I called Group Health and asked for explanation of the charges. They could not give me any - none, nothing. Just that it had been sent to the collections agency. The collections agency doesn't know any details, and around it goes.
Since I don't have time to deal with this now, and I need this issue resolved, I have paid the $122 fee and I am submitting a letter to the bank indicating that this item has been resolved. I will go back and deal with this properly after the the home purchase is out of the way.
It is absurd how this system works. Creditors do not need any proof or explanation of the charges and they can add any collection to your credit report without you ever knowing about it. At a minimal, a credit agency should be required to notify the person that a new charge has been submitted and the person should have 30 days to contest it before anything is ever added permanently to the person's record.
I am surprised that no lawyer has taken up this cause - individuals are loosing millions of dollars by incurring higher finance charges due to faulty credit reports, and no one seems to be doing anything to rectify this problem.