Consumer Comeback Blog

Credit Score Glossary: Third-Party Collectors

Third-Party Collectors: Also referred to as collection agencies, are agencies a company contracts to collect debts on their behalf.

The collection agency makes money only if the debt is collected. For example, if a person owes a large amount on a credit card bill and is not making payments, he or she could be contacted by a collection agency who will request the debtor pay the creditor directly. Often times, collection agencies are hired after multiple attempts have been made to retrieve the money owed to the lender. Laws prevent collection agencies from harassing debtors, but a debtor’s failure to repay could result in a poor credit rating.