Experts recommend that you get a copy of your credit report annually and review it to see if there are errors, charges or loans that do not belong to you. These could signal identity theft. When you receive your report you may notice the debt was transferred. This might have an adverse effect on your credit score, depending on the reason for the transfer.
Finding Transferred Debt on Your Credit Report
When you read your credit report, you'll see a list companies to whom you owe money along with information such as the date the account was opened and your payment history. You will also find a section on negative items and another on delinquencies. The term "transferred" can appear in any one of these sections as a disposition of your debt.
What Is Transferred Debt?
Transferred debt includes financial exchanges, such as transferring your mortgage from one loan servicer to another, or it could be debt acquired when the original company that owned the debt was bought out and the new company assumed the loan. In cases such as these, the debt is listed as transferred and a new debt appears that shows the new owner of your note and the amount that is left on your loan at the time of the transfer. This is not a ding on your credit, as it is normal in the course of business. Transferred can also refer to debt that is written off by one creditor, then sold to another. This is a ding on your credit.
What Is Written-Off Debt?
If you owe a creditor money and haven't made a payment in several months, the creditor may decide the debt is uncollectable and take it as a loss on his books and also on his taxes. In other words, he writes it off. This indicates that he is no longer going to pursue you to collect what you owe. That does not mean, however, that you no longer owe the debt or that you are no longer responsible for paying it.
So Where Does the Transfer Come In?
To recoup some of his loss, the creditor may elect to sell your debt to a debt collector for a percentage of the amount owed. Since the full debt is still owed, the debt collector can pursue you for the full amount. He now owns it. On your credit report, the entry under the original creditor will say "transferred" -- or "sold" -- and will name the company to which it was sold. In the list of accounts section, the name of the new creditor will appear with the entry "transferred from", along with the name of the original creditor. This is now the company that will contact you about the debt.
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