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To pay or not to pay?

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Anonymous
Not applicable

To pay or not to pay?

I have 3 CC's that are listed as closed and collection/charged off. These are not listed as collection accounts (under the collections tab) which confuses me. The simulater shows a significant jump if I pay them off. I'm able to pay them but don't know if I should just pay or do PFD. Advice?
Message 1 of 11
10 REPLIES 10
Anonymous
Not applicable

Re: To pay or not to pay?

PFD.

 

Just paying them is great and all, but the negative information will still be left behind.  This benefits the creditor 100% and you only that you made good on the accounts.

 

By going down the PFD route, you stand to realize a win-win in that the creditor gets paid, but you also get the negative information (trade line) removed. 

 

Either way you're going to pay, so it only makes sense to try and get something out of doing so which will immensely improve your credit file for the next 7 years.

Message 2 of 11
Anonymous
Not applicable

Re: To pay or not to pay?

Has the statute of limitations passed for these accounts?  I wonder if creditors are far more likely to agree to PFD agreements when they have no gun to threaten you with.  On the other hand, if the SOL will expire soon (but hasn't yet) I wonder whether it puts the debtor at risk to advertise his location and willingness to pay -- does it make sense in that case to wait a bit longer?

 

Take your cue from BBS and others with more experience in this area than I do.  I had a ton of these sort of derogs in the late 90s, but I just hid from creditors for a long time.  When I resurfaced everything had fallen off.

Message 3 of 11
RobertEG
Legendary Contributor

Re: To pay or not to pay?

Since they are credit card debts, I am presuming that the simulated score increase results from decreasing the % util on the revolving accounts.

 

The additonal, and unknown factor, is whether in any future quest for new credit, the prospective creditor will become aware of the unpaid debt, and if so, whether it will affect their lending decision.  Credit report exclusion will not discharge the debt, and it could still be a future factor.

 

 

Message 4 of 11
Anonymous
Not applicable

Re: To pay or not to pay?


@Anonymous wrote:
I have 3 CC's that are listed as closed and collection/charged off. These are not listed as collection accounts (under the collections tab) which confuses me. The simulater shows a significant jump if I pay them off. I'm able to pay them but don't know if I should just pay or do PFD. Advice?

A FICO simulator or a CreditKarma  (Vantage Score) simulator?

Message 5 of 11
Anonymous
Not applicable

Re: To pay or not to pay?

From my personal experience (and I realize it did not remove the derogatory account), I preferred to pay the debt only because it would show that I am willing to make good on any debt that I had outstanding. It also benefited me when a manual review of my credit file was required in order to get a approved for one of my credit lines. This happened almost three years ago and has had less of an effect on my overall FICO score. Most people that I have spoken to say...don't pay it because the 7 years starts over once you pay the debt. Not quite sure on which way you should go, but this is my experience with it. Good Luck!!

Message 6 of 11
mamabear
New Contributor

Re: To pay or not to pay?

Thank you all. To answer a few questions...These accounts are not close to falling off. I used the fico simulator and yes the alleged increase would be from lowering the utilization. I believe I will contact them and try to negotiate a pfd first and go from there. These aren't listed as collections yet so I want to avoid that.
Message 7 of 11
RobertEG
Legendary Contributor

Re: To pay or not to pay?

Payment of the debt does NOT reset the credit report exclusion period for any derogs reported by the OC or for any collection reported by the debt collector.

 

Monthly delinquencies have a firm exclusion period of 7 years from date of occurence of the delinquency, and any charge-off or collection has a date-certain exclusion period based ONLY on the reported DOFD.

 

Payment or non-payment only applies to exclusion of tax liens and judgments.

Message 8 of 11
wa3more
Established Contributor

Re: To pay or not to pay?

I would only do PFD, otherwise what is benefit ?

 

Major creditors like chase most likely will not do PFD then you are left with disputing tradeline.

Message 9 of 11
mamabear
New Contributor

Re: To pay or not to pay?

The benefit should be that my utilization will drop significantly because they are still reporting each month. I could be wrong but I would think so.
Message 10 of 11
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