Debt and Credit Score

[TigerD]

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

A paid collection is a negative on the credit report. However, it does not have the same weight as an unpaid collection. Also with time, a paid collection carries less weight.

There is no legal cite to this; it has to do with an analysis of FICO scores. The exact formula is is fiercely protected.

DC

 

[The Dali Lama]

No, I don't have it in writing. We've been doing pre-approvals, and I've spoken to 5 or 6 lenders who have said that though. Why would they tell me they could do the loan if they couldn't? They're the ones who benefit if they give me the loan, and my credit has some blemishes but I've always made good on debts if I got sidetracked a little. I would think that they could look at my record and see that. However, I am not in sales/banking, so I am putting this logically from my perspective, not theirs.

You bring up something I had a question about, though. I really just want to pay it off and get it over with. Should I pay it off over the phone? I feel uncomfortable doing that for some reason. Or do I ask them to send me something to fill out and send in the payment? I'm just trying to get this to work out the best way I can at this point. Thanks

 

[tranquility]

There is no legal cite to this; it has to do with an analysis of FICO scores. The exact formula is is fiercely protected.

So, while I hate to be problematical as I agree as to how things should be, WHAT IS THE BASIS FOR YOUR BELIEF?

I mean, MANY others who post on other sites seem to believe differently. Yet, here we are. Do you have an objective basis for your statement?

 

[enjay]

So, while I hate to be problematical as I agree as to how things should be, WHAT IS THE BASIS FOR YOUR BELIEF?

I mean, MANY others who post on other sites seem to believe differently. Yet, here we are. Do you have an objective basis for your statement?

I've yet to see a single poster on CB or any other related site who has indicated that paying a collection account helped his/her score. I've been following this stuff for years and it has to be thousands who say there was no score bump vs. 0 who have reported any benefit (score-wise) to paying a collection.

FICO never releases its forumlas. Of course a paid collection *should* count for something, but the truth is that it does not. Paying collections will benefit the poster in a manual review situation but it will not improve his scores.

I suspect telling people that their scores will improve is something debt collectors do to get people to pay up but it has no basis in fact.

 

[tranquility]

While I don't read the sites with such intensity, I agree.

 

[LadyBug76]

I saw this thread and wanted to give you a little bit of my experience with improving both my husband and my credit score. Keep in mind I am a newbie at this. My husband had 3 negative items on each credit bureau and I worked on getting those removed. After talking with the collectors, I successfullly had 2 negtaive items removed from 2 credit bureaus, and all negative items removed from one credit bureau. What I did was make sure I could get a "pay for delete". I got in writing from them that if I were to pay the debt in full, they will delete the items on the bureau and it will be as if it never existed. I had no idea how much impact it will have on the score, but I was shocked to see that it gave each bureaus almost 150 point bump! I knew from research that just having a paid collection will not do anything so I tried to push for "pay for delete". I also used this site identityguard.com, and I like it so far because they also have this credit analzyer where you can pick a scenario and see how your credit might be like if you were to open an new account, pay off debts, etc... for each bureau.

 

[enjay]

While I don't read the sites with such intensity, I agree.

I had a freaky deaky obsession with credit scores when I was going through the mortgage process. I've stepped back since then, but it is still fascinating to me and I read a few sites to keep up.

 

[TigerD]

So, while I hate to be problematical as I agree as to how things should be, WHAT IS THE BASIS FOR YOUR BELIEF?

I mean, MANY others who post on other sites seem to believe differently. Yet, here we are. Do you have an objective basis for your statement?

I did once. This was the subject of intense debate on this forum between Ladynred and couple of other posters, but that was a few years ago and I don't remember the cites.

Regardless, the information would be old now as FairIssiac has changed their formula at least once since then.

I'll look for the info, but I won't have time to get to it until the weekend.

DC

 

[tranquility]

I accept, as I would *love* reasonable opinion be the basis of a person's credit report.

 

[MsShauna]

I'm new but I just wanted to add something as it maybe helpful. I worked for the chapter 13 bankruptcy trustee and of course we work with lawyers. Also, I did this with my own credit using the simulator on how my credit would be affected. My scenario of paying off collections did nothing to the score. I asked an attorney about it and she said paying off collections and charge-offs would only be helpful for mortgage reviews and manual reviews. However, some other things to do if you have the money on hand you can offer a pay for delete, or negotiate a status change with a good will letter.

 

[The Dali Lama]

I called Chase and was told that they still owned the debt, but it was being handled by a collector. They forwarded my call to the collector and I agreed to pay $300 less than what they wanted, which is about half of the total. I asked them to mail me something stating the agreed upon amount and it's currently in the mail.

They said that Chase, once notified of payment, will report that the debt was paid in full. I'm expecting this process will take about 60 days or so. The lenders from whom we were seeking pre-approval asked for a letter saying that it was taken care of and Chase is also supposed to send that.

Thanks for your suggestions and comments!

 

[TigerD]

They said that Chase, once notified of payment, will report that the debt was paid in full.

No it won't. It will say: Settled for less than the amount due -- or something to that affect. That is more of a negative than paid, but less than unpaid.

DC

I didn't get to the research I was asked about, but, if it is a slow news day, I'll do it tomorrow at work.

DC

 

[Country Living]

I suspect you'll get a 1099C in the mail after the first of the year for the unearned income (the amount you didn't pay).