What Is Early Warning Services and Why Is It on My Credit Report?

FT Contributor

Finding a line item from Early Warning Services listed on your credit report from at least one of the reporting bureaus means that you owe them money.

If this past-due debt is yours but hasn’t already impacted your credit score, failing to pay the amount owed almost certainly will, which is why you must take action as quickly as possible.

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Why Is Early Warning Services on My Credit Report?

When you have a credit line with any company, they expect you to repay your debt in a timely manner, as agreed upon in your contract.

Failing to uphold your end of the deal will result in the company attempting to collect its debt for at least 60 days. If they remain unsuccessful, the company might eventually sell the debt for pennies on the dollar to a collections agency like Early Warning Services.

Once a collections firm has purchased the debt, they will attempt to recoup the full amount by repeatedly contacting you via phone, sending you text messages, emailing you, or with good old-fashioned letters. Compared to the original creditor, collections firms are typically much more persistent when contacting you.

Is Early Warning Services a Scam, or Is It Legit?

Early Warning Services, which also goes by the business names clearXchange and Zelle, is a collections firm based out of Scottsdale, Arizona, that’s been in business since 2006.

As of this writing, EWS has more than 230 closed complaints with the Better Business Bureau over the last three years, most of which revolve around third-party fraud related to their Zelle platform.

How Does a Collections Firm Like Early Warning Services Work?

Here’s how debt collection works: let’s say you purchase a $4,000 TV on credit from Company ABC. You stop paying after a few months, so the company repeatedly reaches out to figure out what’s going on and restart your repayment.

After repeatedly trying for 90 days, ABC can then sell the total debt at a deeply discounted price to a collections firm like Early Warning Services. In this instance, EWS might pay as little as a few pennies on the dollar, allowing them to purchase your entire debt for not much more than $100.

In other circumstances, Early Warning Services might agree to take over the collections duties on behalf of Company ABC and charge them a percentage of the total debt. So, for example, if you owe $4,000 and EWS gets you to repay, they might take $2,000, or 50%, as a fee for their services.

The Process of Removing Early Warning Services From Your Credit Report

1. Confirm the Debt Is Yours

Companies make mistakes, so if you’ve received a collections notice from Early Warning Services, the first step is to call the company and verify the debt is actually yours.

It’s easy to get nervous when you have a collections representative on the other end of the line. Remain calm and keep in mind that this is only an informational call. Do not admit to any of the debt or otherwise discuss your finances.

Simply inquire about the balance and the original company that owned the debt. By law, collections firms must send debtors a validation notice within five days of your call, which outlines these same details in writing.

2. Pay or Dispute the Amount Owed

If you learn that the debt isn’t yours, the representative will let you know where you can send your formal dispute letter.

However, if you confirm the debt is yours, you can either repay all at once or over several installments, depending on the amount owed.

3. Consider Hiring a Credit Counselor

If you have a collections notice listed on your report, whether from Early Warning Services or another firm, they’ve already sent the information to at least one credit reporting bureau. Consequently, your credit score could drop by as much as 35%, so it’s essential to remove the debt if it’s not yours.

Even after you’ve fully repaid your debt to EWS, the Fair Credit Reporting Act stipulates that the incident can remain on your credit report for up to seven years and continue impacting your score.

You might consider hiring a credit repair company and implement good habits that raise your credit score, and keep it there.

Can Early Warning Services Take You to Court for Repayment?

If you’re unable to repay some or all of your debt, consider sending Early Warning Services a letter containing the following details:

  • Current date and your address;
  • Name and address of collection agency;
  • A statement indicating that you no longer wish to be contacted by phone, email, mail, or in-person visits;
  • Your signature, printed name, and the date.

Upon receiving this letter, EWS can only reach out to you to inform you of their plans (e.g., they won’t contact you again).

Keep in mind that even if you follow these actions, it’s important to note that Early Warning Services, or any other collections firm, can take you to court to recoup their debt. In a worst-case scenario, the company can even garnish your wages until you repay your debt in full.

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