Collection account removed and Equifax score DROPS 31 points?

[Anonymous]

Hi all,

Hoping someone has an idea of what's going on here.  I had a collection account from a medical bill back in 2011 that's been reporting to all three bureaus for the last few years.  Finally could afford to pay it, so I called them up, tried to negotiate, was told the provider doesn't negotiate, but they will immediately remove from all three bureaus if I PIF, so I did.  Goodbye, $670 of my dollars, hello, a nice bump in my FICO.  Or so I thought....

The collections company was true to their word, and removed the account from all three bureaus within a week of my payment.  It was removed on Feb 9th.  The very next day, my Equifax score tanked by 31 points.  It hasn't moved since, and neither have the other two scores.  I expected at least some positive effect from getting that collections account removed....I certainly didn't expect it to tank one score and not affect the other two.  Nothing else has happened recently.  Was I wrong to think that removing a baddie would bump my score, at least a little bit? 

Because I know you'll ask what my credit looks like overall....all three scores were in the high 660's before this happened.  Now Equifax is 635, TU is 665, and Exp is 666.  Baddies:  I have a BofA foreclosure from 2011, an old joint TFS auto loan that was perfect until my ex husband went 90 days late on the VERY LAST PAYMENT long after we split up (which turned a goodie into a baddie), and an ancient Dell Financial Services account that went into collections, but I paid off in full on payments years ago.  Nothing negative within the last 5 or 6 years (since I split up with said ex).  Otherwise, I have several other paid off mortgages, a current mortgage, several paid off auto loans, a current auto loan, and a number of credit cards, all in perfect standing.

Help?

[Anonymous]

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@Anonymous wrote:

Hi all,

Hoping someone has an idea of what's going on here.  I had a collection account from a medical bill back in 2011 that's been reporting to all three bureaus for the last few years.  Finally could afford to pay it, so I called them up, tried to negotiate, was told the provider doesn't negotiate, but they will immediately remove from all three bureaus if I PIF, so I did.  Goodbye, $670 of my dollars, hello, a nice bump in my FICO.  Or so I thought....

The collections company was true to their word, and removed the account from all three bureaus within a week of my payment.  It was removed on Feb 9th.  The very next day, my Equifax score tanked by 31 points.  It hasn't moved since, and neither have the other two scores.  I expected at least some positive effect from getting that collections account removed....I certainly didn't expect it to tank one score and not affect the other two.  Nothing else has happened recently.  Was I wrong to think that removing a baddie would bump my score, at least a little bit? 

Because I know you'll ask what my credit looks like overall....all three scores were in the high 660's before this happened.  Now Equifax is 635, TU is 665, and Exp is 666.  Baddies:  I have a BofA foreclosure from 2011, an old joint TFS auto loan that was perfect until my ex husband went 90 days late on the VERY LAST PAYMENT long after we split up (which turned a goodie into a baddie), and an ancient Dell Financial Services account that went into collections, but I paid off in full on payments years ago.  Nothing negative within the last 5 or 6 years (since I split up with said ex).  Otherwise, I have several other paid off mortgages, a current mortgage, several paid off auto loans, a current auto loan, and a number of credit cards, all in perfect standing.

Help?

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The score drop could be due to the AAOA have dropped because it was removed, thus dropping your AAOA past a threshold that could effect your score.

You will not see a significant score increase until your very last baddie falls off.

[Anonymous]

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@Anonymous wrote:

The score drop could be due to the AAOA have dropped because it was removed, thus dropping your AAOA past a threshold that could effect your score.

You will not see a significant score increase until your very last baddie falls off.

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Are you saying that even a collection account factors into the AAoA?  This was a hospital bill...so not anything that existed as an "account" of any sort before it went into collections, so it never counted before.  Also, it's age wouldn't have been a negative factor even if that was the case...it's not older than any of my other accounts.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

The score drop could be due to the AAOA have dropped because it was removed, thus dropping your AAOA past a threshold that could effect your score.

You will not see a significant score increase until your very last baddie falls off.

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Are you saying that even a collection account factors into the AAoA?  This was a hospital bill...so not anything that existed as an "account" of any sort before it went into collections, so it never counted before.  Also, it's age wouldn't have been a negative factor even if that was the case...it's not older than any of my other accounts.

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I was thinking a chargeoff from the original creditor.

No, collection accounts are not factored into your AAOA, unless they are coded to mimick the original creditor. Which CA's sometimes do.

[RobertEG]

It may be due to rebucketing.

FICO scoring is not based on one single scoring algorithm.

The risk analysis uses multiple "scorecards" for each scoring category, with one scorecard being selected based on criteria intended to compare like groups of consumers.

While the specifics of selection of the scorecard are proprietary trade secrets, payment history is known to generally use a less favorable scorecard comparison when the consumer has any remaining major derogs, such as collections, charge-offs, public records, or delinquencies of 90+ days.

Once all major derogs are excluded or deleted, a "clean" scorecard is used which compares you to consumers with no major derogs, which can result in a temporary drop in scores.

[Anonymous]

I agree with Robert also the AA.  I feel both come into play.  You were probably peeked out in  the old bucket.  I took a huge 25 point for just applying for my Citi Dc  card. (only on 1) Over the next three months I more than got the points back on that one and and added 25 points to the other two.  When I just had 1 active card and a profile as old as dirt all three of scores were above 750 real fico scores. . When I got my 2nd card I dropped 90 points.  Now I have better( and more)  cards and  am moving closer again toward 750  but the AA has got to catch up.