Debt and Credit Score

[The Dali Lama]

What is the name of your state (only U.S. law)? TX

Moderators, please put this in the correct forum if It's in the wrong place.

I have a disagreement on a debt for a credit card from Chase and refused to pay (less than $400). They turned the account over to a collection agency and I haven't been communicating with them because I don't believe that I owe them money. That's not the point though.

I want to make a purchase and my credit score is 13 points too low to receive the loan. There were a few items on my credit report, according to the lender that we spoke to, but they have all been taken care of (paid in 2008). He suggested taking care of the Chase debt.

Do I contact Chase or the collection agency to repay the debt? Why? How long would it take to raise my score if I take care of it and haven't missed any payments (since 2008)?

Thank you in advance for your help.

 

[seniorjudge]

Paying your debts always helps your credit score.

 

[The Dali Lama]

Thanks. I understand that paying my debts will improve my credit score.

These are the questions I need help with:

Do I contact Chase or the collection agency to repay the debt? Why? How long would it take to raise my score if I take care of it and haven't missed any payments (since 2008)?

 

[TigerD]

Thanks. I understand that paying my debts will improve my credit score.

These are the questions I need help with:

Do I contact Chase or the collection agency to repay the debt? Why? How long would it take to raise my score if I take care of it and haven't missed any payments (since 2008)?

The collection agency.

Far too many variables with a trade secret formula to make a guess at the second question.

DC

 

[cosine]

Thanks. I understand that paying my debts will improve my credit score.

These are the questions I need help with:

Do I contact Chase or the collection agency to repay the debt? Why? How long would it take to raise my score if I take care of it and haven't missed any payments (since 2008)?

It depends on who OWNS the debt now. If Chase still owns it and has placed it with the CA, you can contact either. Chase may well tell you they won't deal with it now that it is placed with the CA, and to contact the CA. Do this communication in writing and you get an answer naming the CA in writing. Having proof that Chase named that CA can help if something goes wrong and the CA is the wrong one, for example.

If the debt has been sold, then Chase is out of the picture and the new owner (which may be a CA, or may place it with a CA) is the primary party.

Before paying any CA, be sure to get the current balance (it will be a lot higher than the original $400, now) in WRITING. You should have already gotten one or more collection letters from the current CA. If it didn't name the current creditor, ask for validation to get that info and verify the CA with the current creditor.

The bank you are trying to get the loan from MAY be willing to conduct this transaction for you, after you pay them that debt in cash. This way, they can see that the matter is being taken care of and MAY be willing to close the loan before the credit reporting processes are done (which can take a few months).

Beware there are collection scams going on where fake-CAs have gotten info about debts, and pretend to own the debt, or pretend to have the debt from a fake creditor (their partner in crime), or even from the original creditor (hoping you won't check to find it's all fake). Paying a fake-CA does not relieve you of any obligation to pay the real creditor. You need to verify that it is not a fake-CA. And yes, this happened to me (but I caught it).

 

[cosine]

Paying your debts always helps your credit score.

Paying them when they are due helps the most.

 

[The Dali Lama]

Thanks for the helpful information. I will contact Chase first to see what they are willing to do, then verify the debt with the CA and deal with them if that doesn't go anywhere.

If anyone has further advice on how to interact with Chase or the CA please comment. According to the lender Chase just put the debt on my credit report last week.

If Chase refuses to work with me at this point and I get debt verification from the CA:

1) Should I try to get them to accept less than what they claim? If they accept, say, $300 instead of the full amount, will that satisfy the debt so that I can improve my score? I will contact Chase first to see what they are willing to do, then verify the debt with the CA and deal with them if that doesn't go anywhere.


2) I know that CAs are generally disliked for their sometimes aggressive or deceptive tactics. If I pay an agreed (over the phone) amount how can I be sure that they're not going to hold out for more? Will they send me a contract that I can copy and save for my records? In other words what is the best way to proceed with a CA after getting debt ownership verification?

Please excuse my ignorance on these matters, and thanks in advance for your helpful advice.

 

[enjay]

A paid collection is as bad as un unpaid one as far as FICO is concerned.

 

[The Dali Lama]

Enjay,

Are you saying that whether or not I pay the debt my credit score will stay the same (not considering any other credit transactions that may take place to raise or lower the credit score on their own)?

 

[enjay]

Enjay,

Are you saying that whether or not I pay the debt my credit score will stay the same (not considering any other credit transactions that may take place to raise or lower the credit score on their own)?

Yep. The damage is done by the lates and unless something has changed very very recently (credit is a hobby of mine) paying a collection won't help your score. I was going to send you a PM but I don't think you have yours turned on. There's a great site for credit issues that you can find easily through a search. I don't know if we are supposed to post links to other sites but you should find it and post your issues there. Good luck

 

[TigerD]

Enjay,

Are you saying that whether or not I pay the debt my credit score will stay the same (not considering any other credit transactions that may take place to raise or lower the credit score on their own)?

That's what he is saying -- but he is wrong.

DC

 

[tranquility]

That's what he is saying -- but he is wrong.

I haven't found a cite and logically agree with debtcollector`, but everything I read seems to say enjay is correct.

While it's not my situation and I have little (Read, no.) experience in debt collection or scores, all the studies, reports and consumer information seems to support or, at least, not deny, enjay's theory.

Why is this? What is the basis for claiming enjay is wrong?

 

[davew128]

I haven't found a cite and logically agree with debtcollector`, but everything I read seems to say enjay is correct.

While it's not my situation and I have little (Read, no.) experience in debt collection or scores, all the studies, reports and consumer information seems to support or, at least, not deny, enjay's theory.

Why is this? What is the basis for claiming enjay is wrong?

I'm in agreement. All empirical evidence for FICO scoring indicates its the collection account that affects the score not whether it is paid or unpaid. Having it paid helps with manual review for mortgage lenders but for FICO scoring it is irrelevant. Of course having it paid also makes it easier to justify a goodwill adjustment and removing the reporting altogether.

 

[The Dali Lama]

Well, I spoke to some more lenders and they all say that if I can work it out with Chase and get a letter saying it's good they'll give us the loan whether my credit score improves or not. So I'll call Chase tomorrow and see what they say. Thanks for the advice!

 

[seniorjudge]

Well, I spoke to some more lenders and they all say that if I can work it out with Chase and get a letter saying it's good they'll give us the loan whether my credit score improves or not. So I'll call Chase tomorrow and see what they say. Thanks for the advice!

Uh-huh. You have those guarantees in writing, correct?









I didn't think so.