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Collections effect on CC application?

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3darcher2
New Contributor

Collections effect on CC application?

I have a report that includes one collection that is 5 years old and out of SOL, one recently paid charge off where the charge off is old but just paid it off, a three year old paid tax lien and a single 30 day late.

 

If I apply for a Visa or MC somewhere, is the open collection usually a dealbreaker?  It is for about $4K, but again, out of SOL.  Nothing I can do about the tax lien now and my GW so far on the late are not getting me anywhere.  I refuse to pay the collection because it was BS in the first place; it was a cell phone bill where my plan was illegally changed.  The CA never tried to collect because I guess they knew it wouldn’t stand up in court, but it’s out on my reports with two years to go.

 

Message 1 of 9
8 REPLIES 8
Burned2manybridgesB4
Valued Contributor

Re: Collections effect on CC application?

I had an old Providian (4.5k), that went down the toilet, and then was traded off to Wash Mut, then some other bank. That was a major red flag for the CC's to give me approval for quite a while. Wish ya luck.

Message 2 of 9
Anonymous
Not applicable

Re: Collections effect on CC application?

Couple things I've learned very quickly over the past few weeks. Collections absolutely knock down your FICO score no matter if they are paid or not. Thus they can bump you below 700 in almost all cases. This means virtually no "Instant Aprovals", and your only chances for a CLI or new card will be to do a reconsideration. I had to get a PIF collection off of my files (just mentioned a GW letter to do so in another thread) in order to move forward. If the collection is old, you've got a bit less 'splainin' to do... I fixed a ton of stuff and got to the 680 club at all the bureaus. But I'm in a wait for decision for two cards, and did get an AMEX upgrade, but that didn't require a HP.

 

So if you can't get it removed altogether, get your story straight!!! You're gonna need it ;-)

Message 3 of 9
3darcher2
New Contributor

Re: Collections effect on CC application?

Since it was out of SOL, I hadn't really thought much about it.  I got the CA with a 1-2 punch but I had some other things going on and hadn't done anything with this.  They updated twice while I was waiting for validation, which was a pitiful attempt.  I am gonna wait and see what happens and maybe try a local CU.

 

I guess for store cards it seems a little more like the collection might not be as big of an issue?

Message 4 of 9
Anonymous
Not applicable

Re: Collections effect on CC application?


@Burned2manybridgesB4 wrote:

I had an old Providian (4.5k), that went down the toilet, and then was traded off to Wash Mut, then some other bank. That was a major red flag for the CC's to give me approval for quite a while. Wish ya luck.


That some other bank is Chase.

Message 5 of 9
trumpet-205
Valued Contributor

Re: Collections effect on CC application?

Be it paid or not paid, collection and charge off are major derogatory on your credit report. Try to write a goodwill letter asking for deletion on that paid chargeoff.

 

With combination of tax lien, collection, charge off, and a 30 day late, I don't think any prime lender will extend credit to you.

 

Your choices are

 

* Talk to local credit union and apply a credit card from them. Explain your credit report to loan officer.

* Open up a secured credit card with security deposit.

Message 6 of 9
LS2982
Mega Contributor

Re: Collections effect on CC application?


@trumpet-205 wrote:

Be it paid or not paid, collection and charge off are major derogatory on your credit report. Try to write a goodwill letter asking for deletion on that paid chargeoff.

 

With combination of tax lien, collection, charge off, and a 30 day late, I don't think any prime lender will extend credit to you.

 

Your choices are

 

* Talk to local credit union and apply a credit card from them. Explain your credit report to loan officer.

* Open up a secured credit card with security deposit.


I agree, until the derogs come off your pretty much stuck with mediocre cards.




EQ FICO 548 3/3/16
Message 7 of 9
Wolf3
Senior Contributor

Re: Collections effect on CC application?


@3darcher2 wrote:

Since it was out of SOL, I hadn't really thought much about it.  I got the CA with a 1-2 punch but I had some other things going on and hadn't done anything with this.  They updated twice while I was waiting for validation, which was a pitiful attempt.  I am gonna wait and see what happens and maybe try a local CU.

 

I guess for store cards it seems a little more like the collection might not be as big of an issue?


Do you have any major CC?   If not you should consider a decent secured card to start rebuilding. 

Message 8 of 9
Mellon
Established Contributor

Re: Collections effect on CC application?

it depends on the lender.... it can be difficult

 

back when I got my Amex Delta card I had several chargeoffs (of course this was 2007 so credit lending was a little different)

 

I converted that card to a BCE last year. Now I have 3 baddies on my report (1 CO-HSBC, 1pd Collection and 1 unpaid collection (both Midland). I have received a Discover card (1K) and Barclays Apple (3500) with those baddies on my report.

 

FWIW.. Chase and Citi won't give me anything...

Message 9 of 9
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