Reply
New Visitor
Posts: 1
Registered: ‎10-05-2012
0

Paying off old collections

Hi there,

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!

Moderator
Posts: 13,892
Registered: ‎04-15-2011
0

Re: Paying off old collections

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.

Starting Score: 504
July 2013 score:
EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
Take the myFICO Fitness Challenge

Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!
Member
Posts: 8
Registered: ‎04-02-2007
0

Re: Paying off old collections

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.

Member
Posts: 8
Registered: ‎04-02-2007
0

Re: Paying off old collections

please help

Contributor
Posts: 567
Registered: ‎10-04-2012
0

Re: Paying off old collections

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.

FICO 04 scores: 809 (EQ) 812 (EX) 818 (TU)

Amex Platinum NPSL - Citi HHonors Sig. $58k - BMW Ultimate $40k
Chase Sapphire Preferred $62k - Merrill Lynch + Signature $41k - USAA Rate Advantage $28k
NFCU Flagship Signature $50k - USAA Cash Rewards AMEX $28k
Citi Platinum Select / AAdvantage Signature $31k - Chase Amtrak Rewards World MC $41k

Epic Contributor
Posts: 20,897
Registered: ‎03-19-2007
0

Re: Paying off old collections

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.

Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on actual applicant approvals and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.