Knowing how to negotiate successfully with creditors can be a good first step to raising your credit score. Since a good credit score is necessary to help you in today’s economy, it is also a necessary step to take. However, it can be intimidating to have to negotiate with creditors, as they can range from simply authoritative, to downright rude at times. Nonetheless, here are some steps you can take toward successful negotiations that will help you in the long run.
First and foremost, you must know the law. If you know the law, creditors are much less intimidating. Even if you don’t know all the laws regarding the Fair Debt Collection Practices Act, which can be found at the Federal Trade Commission’s website, you should at least know some of the highlights. One is that creditors cannot threaten you with jail time as there is no such thing as debtor’s prison (except where child support is concerned but that’s another story).
Creditors cannot call you before 8am or after 9pm, and they cannot call you at work unless you have given them permission. Creditors may not contact you by phone if you have asked them in writing not to. Those are some of the most important laws to know, because some of them do use those tactics to try to get you to pay them. However, keep in mind that most creditors, especially original creditors generally do follow the law. As long as you know these laws, you do have the upper hand if things get out of control.
Second, you will need to negotiate with the original creditor if at all possible. Even then, you need to get everything in writing. By getting everything in writing, you have recourse if your creditors settle for less, but later try to collect the full amount. It is actually best if you can write directly to the creditor stating that you will only deal with them in writing. Send this letter certified mail, return receipt requested so that you know it was received and when. Many creditors will try to get you to pay over the phone, but this is not a good idea. You always need to have paper trail of any debts that you settle, or pay off.
Third, make sure that you do not give them any of your account numbers over the phone. Many creditors will tell you that you have to pay by 5pm, or tomorrow morning to get their deal. This is something that you cannot fall for. If the deal they are giving you is genuine, they will extend it long enough to get it to you in writing. If not, then the deal is not genuine enough for your taste, and you will find another way to pay.
Fourth and most important, be nice. You can always catch more flies with honey than vinegar. Just because you have the upper hand in the negotiations after learning the laws and knowing who to negotiate with doesn’t mean that you can get away with not being nice. When you talk to them on the phone, state that you want everything in writing before you will pay anything, but be nice about it. Use the words please and thank you. You know, just like your mother taught you when you were young. If they start to get rude or belligerent, which some will, just state that you would like to please speak to their supervisor, and keep going until you find someone who is as nice to you as you are to them, so that you can negotiate peacefully. State what you can pay, and if it is not enough, find a middle ground somewhere.
If you follow these steps, you should be able to successfully negotiate with most creditors. There may still be a select few that are impossible to negotiate nicely with, but those really are few and far between. They just get the most publicity because they are the ones that people get fed up with.