Collection agencies make their living by collecting debt. They typically have little regard for reporting information correctly until they are forced to.

There are different types of collection agencies; they will usually specialize in a certain area of collections like junk debt or commercial debt. Some collection agencies are hired to work for the original creditor, and some purchase the debts, at a discounted rate, from the original creditors.
After a collection agency has exhausted their attempts to collect a debt, and they feel the debt is uncollectable and not valuable enough to them to continue their collection efforts, they will package similar debts together and resell them to other collection agencies.
The buyers of these debts are commonly known as “Junk Debt Buyers”. The transfer of ownership of these debts is often done with little or no documentation other than a simple spreadsheet with basic data on the debt.
The new owner of the debt will have a difficult time proving they have a right to collect, and proving the validity of the debt.
Often times there are issues with the transferwhereby the original collection agency can “forget” to remove their reporting of the collection from your credit report. This means that the collection would be reported twice on your credit report, once by the original collector and a second time by the “Junk Debt Buyer.”

A valid collection can only be reported by the party that has legal authority to collect the debt, therefore any reporting by collection agencies that previously had ownership or collection rights would constitute illegal reporting.

Using a standard dispute, or validation of debt, letter would be proper tactics for removal of this type of derogatory account.

Author's Bio: 

About the Author - Kim Carpentier is Owner and General Manager of Valley Credit Builders ( He is using his 35 years of successful business ownership, and transition, to help small business owners build business credit so they can separate the financial responsibilities between business and personal credit. He specializes in helping business owners establish excellent business credit scores and then leverages those scores to access cash and credit for their businesses without their personal guarantees. The Business Credit and Funding Suite is the leading business cash and credit access system in the world today.