Attempted recovery of a past-due credit obligation or debt by a collection department or agency Net Worth Collections Credit Bureau Debt Snowball Method

**Collections** refers to the attempted recovery of a past-due credit obligation or debt by a collection department or agency. It appears on your credit report and negatively impacts your credit score. It signifies that a creditor has given up on you paying them directly and has employed a third party to attempt to collect the debt.<br /><br />Let's define the other terms you provided for a more complete understanding of credit and debt management:<br /><br />* **Net Worth:** This is the total value of your assets (what you own, like cash, investments, property) minus the total value of your liabilities (what you owe, like loans, credit card debt). A positive net worth indicates you own more than you owe, while a negative net worth means you owe more than you own.<br /><br />* **Credit Bureau:** A company that collects and maintains individual credit information and sells it to lenders, creditors, and consumers in the form of a credit report. The three major credit bureaus in the United States are Equifax, Experian, and TransUnion.<br /><br />* **Debt Snowball Method:** A debt reduction strategy where you focus on paying off the smallest debts first, regardless of interest rate. Once the smallest debt is paid, you move on to the next smallest, and so on. The idea is to build momentum and motivation as you see debts disappear.<br />