Pulled my first credit report -- Qs

[kmacqua]

Hello!

I'm a newbie here and just pulled my credit report for the first time ever: an Experian report via Target's ProtectmyID offer.  Overall, the report is more favorable than I feared. Nonetheless, I'm surprised that it contains two collections items.  I'm surprised--but I'm not sure how to read & interpret this part of the report.  (By the way, I read the "How to Read and Understand Your Credit Report" thread pegged here; very, very helpful, but I'm still confused on this point.)

The two collections items date to 2010, just after an adverse life event. I know I had some delinquent payments on some bills that went to collections.  I don't recognize these particular collections agencies. If the report listed the account/company that sent the item to collections, THAT I would recognize. I'm not currently receiving any mailed statements or calls from collections agencies.

Both tradelines are listed as "potentially negative closed". One has "account status: closed" and "balance: $x.xx". The other also has "account status: closed" but has a charge-off listed under the payment status!

For the first, does this mean that mean that the collections item is paid off and they are just reporting that I had a history of something going to collections in amount $x.xx? And this will just disappear in time.  Or does this mean that there is an item out there that the collections agency believe I still owe and I better take action to get it cleared?  If the former, I'm surprised because I know I had more items go to collections about that time; I would expect more accounts listed.  If the latter, I'm surprised because I thought I had taken care of all items that did go to collections; I'd expect no accounts listed.

I'm also surprised by the charge off.  I don't know of any unsettled collections item that they just gave up on. Is my best bet to ask for a goodwill delete, followed by a request to PFD if they don't accept the goodwill?  It doesn't list the balance owed on the account or have a phone number. Just an address. I guess my first step is trying to find out where the item stems from!

[RobertEG]

As a preliminary issue, the FDCPA has a specific requirement intended to address and avoid your issue of not recognizing a debt reported for collection.

When a debt collector initiates collection on a debt, which includes reporting to your CR, they are required to send a formal collection ("dunning") notice to the consumer within 5 days, informing the consumer of their collection, the name of the current owner of the debt, the amount of the asserted debt, and of their right to request more information (such as the name of the original creditor) within 30 days of their dunning notice.

Did they ever send dunning notice?

As for how the collection is reportting, they contain a hodge-pode of information that is often confusing, even to those who have substantial experience in reading credit reports.  They include information pertaining only to events that occured under the OC account, as well as info on their collection.

For example:

A status of open or closed can refer to either the OC account of their collection.

The showing of a charge-off under a collection almost always refers to the OC having taken that action, and thus a prior status of the OC account, not their collection.

The same applies to reporting of monthly delinquency status, as debt collectors cannot report delinquencies on their collection.

All collections are "open" status until the debt is paid or their collection authority is terminated.  However, OC accounts are invariably closed prior to referral for collection.

The balance reported by a debt collector is of the amount they are authorized to attempt to collect. 

The balance reported by an OC is of the debt currently owed to them.

They will usually be the same if both are reporting.  If the OC has sold the debt to the debt collector, they OC must report $0 debt owed to them, which does not mean the debt is paid.  The debt collector reporting then signifies both the amount they are attempting to collect AND that the debt is owed to them.

If you have not paid a debt, it is possible for both the OC and debt collector reporting to show a balance, or for both to show $0.

If the OC still owns the debt, they can report its current balance, and if they have assigned collection authority to a debt collector, the collection can also report a balance.

If the OC sells the debt, they must report $0 balance now owed to them.  That does not mean the debt is paid.

If a debt collector has purchased the debt and then sells it to another, they are no longer collecting, and thus must report $0.

Thus, credit reporting of $0 balance does not necessarily signify the debt is paid.

It can get very confusing when a commercial credit report throws out information without clearly pegging it to who reported and/or whose account it applies.

[kmacqua]

So, bottom line, if it's on my credit report, then they think I still owe them something.

To clarify, I had a number of items go to collections in 2010 because of an adverse life event in late 2009. I may have received a dunning notice (I never knew what that was called; thanks!) because I was receiving a number of them around that time. So when I say that I don't recognize the account, it's more accurate to say that I can't place what that particular account is for.  I would likely recognize the OC name, but not know that "ABC Collections Co" refers to a particular bill from a dr/hospital or company with whom I did business and missed paying for. So these are likely debts I owe, I just can't match them to the original obligation. My entire basis for thinking that I had taken care of all collections items is that they stopped sending me bills/statements asking me to pay.

If I ask for a debt validation, does that give me any information about the original account/bill that I became delinquent on? Or does that just verify information about the collections agency?

How can I find out what the amount of the charge off is? It's listed as a THD/CBNA revolving account (charge account) with a $5001 limit. Also, under comments, it notes that it was transferred to another lender or claim purchased. 

Thank you for all the guidance!

[kmacqua]

I figured it out! And the two items are related. And not at all what I had thought they were.

I had a Home Depot credit card with a CL of $5001 that I never used.  Long ago, I bought a $2.55 drawer pull and put it on the card.  Because it was such a small item, I forgot that I had charged it and not paid cash, and ignored the electronic statements I was getting.  (Why would I look at a statement for a card I didn't use and had a $0 balance? Oops!)  Through late charges and interest, that $2.55 became $127 over time.  That's one expensive drawer pull!  The account went delinquent and was passed to Midland collection agency.

I paid the Midland collections bill about a month or so ago. I'll have to check the exact date the payment posted.

So my credit is showing both the original account (the Home Depot card) AND the related Midland collections account.

I'm assuming that the Midland collections tradeline will be removed from my credit report shortly, i.e. the next time they report.  I mean, they're not allowed to report an account with amount owing once it's been paid, right?  So I'll be watching for that to come off and look into the proper way to do a dispute if it doesn't come off in a reasonable amount of time.

Now, the original Home Depot card. If the original account is, in the end, paid off through the collections agency, can they still be reporting that?  I'm confused by the charge off notation here.  I thought a charge off was when a creditor/bill issuer determined they were likely never going to collect on the obligation and were essentially "writing it off" their books (no longer an asset).  Since the obligation is actually paid now, do they also have to reverse/delete/remove the charge off from my report?  Is there some way, on the up and up, for me to get the item removed from my report?  I'm not sure if this is something where "wait and see" is an ok strategy or if I need to take action to get it resolved.  Or is my stupid oversight re the original $2.55 charge is a mistake I need to live with.