In college I was really stupid with credit. I opened 2 cards in 2004-2005 with $2000-3000 limits and one with $300 limit, maxed them out and eventually went into collections. I also had a medical account go into collections in 2008 and was paid off right away. That was 5-6 years ago, and I have since made some payments. I am looking to purchase my first home, I have a FICO score of 688 and Experian score of 660, I make 38k/year and have 2+ years of timely payments...
I am now settling these really old collection accounts because I was told by my bank that I have to have these completely paid off before a mortgage broker will even talk to me. These accounts will be settled by 10/31/12... how badly will paying these of affect my score? How long should I wait before working on a mortgage loan?
Some people say paying these collection accounts will in essence reset them on my credit report and they will now stay on for an additional 7 years. Will they still be timed off my report in the next 12-24 months or will they now remain for another 6-7 years? Since the original creditor information will fall off, the collection count should fall off too right?
Do I have any hope?!?!?
Thanks to anyone who can answer some questions!
No, just paying them off will not reset the DOFD. But have you tried a PFD for them? Just paying them will let them sit on your CR, if you get a PFD they will be gone.
If you send a PFD letter to the agency, on something that is paid in full, do they have to delete it from your credit reports?
The issue that I am having is that I had a loam that went to collections and has been paid in full for about 14 months now. I have been using a credit repair agency and that item still has not been removed.
Paying on them will not reset your reporting horizon, but it WILL reset the statute of limitations clock with regard to potential litigation.
My best advice would be to delay the home purchase until they age off here shortly, but if you have to buy now and your lender is demanding that they be satisfied, then pay them in full or settle them and get a letter to that effect from each collector.
Once paid, no, the reporting will not automatically be deleted.
In fact, CRA policy is that furnishers should not report deletion of prior account derogs based on ultimate payment of the debt.
Payment is unrelated to the occurence of the derog itself, and their policy is that the reporting should remain as an accurate record of the consumer's credit history.
However, furnishers may report deletion, notwithstanding CRA policy, if they so choose. When reporting, they need provide no reason, and thus it is not questioned by the CRAs. Some furnishers strictly abide by CRA policy, while others will grant exceptions. You need to ask, either before payment via a PFD offer, or after paying via a good will request.
Making payments on a debt will never reset any of the credit report exclusion periods for derogs, which are based under FCRA 605(a) on their dates of occurence (except for tax liens, which are based on their date of payment).
A collection becomes excluded based solely on the DOFD on the OC account plus 7 years plus 180 days. Period.
Paying on a debt will not necessarily reset the statute of limitations for them to bring legal action. Some states provide for a reset based on payments or firm offers to pay, while others do not. You need to research the provisions of your specific state SOL statute for debt.