2 Collection Accounts

[Anonymous]

I currently have two collection accounts which are outstanding:

(1) is still with CapOne but is being collected by Northland. Balance is around $1k.

(2) is with Asset and the balnce is reported as being $3k but they keep offering to settle for about 1/3rd of that.

If I pay one (or both of these off) will the reduction in the amount(s) owed offset any potential re-aging that may occur? I ask this because my score is currently at 594 (started in July 2012 with a 571, paid off a BofA that dropped it to 551 in Sept, and now it's back up plus some.)

I am trying to get to 620 for a home loan and, since my score is steadily ticking updwards, I am reluctant to risk re-aging the account only to bring down my "Ulitization".

Any advice on this?

[Shogun]

Have you asked for a PFD from either one of them.   I do recommend paying them, especially if they will PFD that one from Asset for a discount.  I do understand that sometimes updating the TLs can cause a drop in score, but they rebound pretty fast.  It's better to get them PFD or pay and then GW now and be working to build some new credit so your scores will grow.

[guiness56]

What do you mean by re-aging?

How old are these debts?   Are they beyond the suing SOL for your state?

Just paying them is not going to help your score.  And settling for less than full amount is a statement you don't want on your CR.

[Anonymous]

They are both past the SOL which is why I did not want to consider re-engaging either company until that had passed.

The CapOne account was opened in 2008 and was sent to collection in 2009. The Asset was written off by Citi and was opened and closed during the same period.

And what I mean by re-aging is that, if I were to pay the CapOne account, instead of my Date of Last Activity showing 2009 (as it currently does), it could be updated to reflect DOLA as 2012--which would tack 3 more years of that account showing on my report. When I paid off my BofA account, it did not reage so I lucked out with that one.

I currently have 2 student loans which have been paid on-time for over 15 months and a Secured Wells Fargo card that has been ontime for the last 7 (the entire life of the account). I assume this is whats putting my score on the incline.

[Shogun]

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@Anonymous wrote:

They are both past the SOL which is why I did not want to consider re-engaging either company until that had passed.

The CapOne account was opened in 2008 and was sent to collection in 2009. The Asset was written off by Citi and was opened and closed during the same period.

And what I mean by re-aging is that, if I were to pay the CapOne account, instead of my Date of Last Activity showing 2009 (as it currently does), it could be updated to reflect DOLA as 2012--which would tack 3 more years of that account showing on my report. When I paid off my BofA account, it did not reage so I lucked out with that one.

I currently have 2 student loans which have been paid on-time for over 15 months and a Secured Wells Fargo card that has been ontime for the last 7 (the entire life of the account). I assume this is whats putting my score on the incline.

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DOLA has nothing to due with how long anything can stay on your CR.  It just means the last activity that was done.  The SOL and the CRTP are set by the DOFD, and that would not be reset by paying off a CO or a CA.

[guiness56]

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@Anonymous wrote:

They are both past the SOL which is why I did not want to consider re-engaging either company until that had passed.

The CapOne account was opened in 2008 and was sent to collection in 2009. The Asset was written off by Citi and was opened and closed during the same period.

And what I mean by re-aging is that, if I were to pay the CapOne account, instead of my Date of Last Activity showing 2009 (as it currently does), it could be updated to reflect DOLA as 2012--which would tack 3 more years of that account showing on my report. When I paid off my BofA account, it did not reage so I lucked out with that one.

I currently have 2 student loans which have been paid on-time for over 15 months and a Secured Wells Fargo card that has been ontime for the last 7 (the entire life of the account). I assume this is whats putting my score on the incline.

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Nothing can change the DoFD, which is what determines how long something stays on your report.  DOLA has nothing to do with that.

[RobertEG]

Unpaid bad debt can be a show-stopper in any future quest for credit.  Being excluded from your CR based on its age can shield the unpaid debt from being discovered by a simple pull of your CR, but it is still there.  It is, in my opinion, always best to satisfy any old, delinquent debt.  A mortgage lendor may, for example, simply ask whether you have any old, unpaid delinquent debt.

If they wont accept a PFD, then the next best thing is to attempt a settlement for less, with their agreement not to report a paid for less special comment.

Your CR would then appear the same as if paid in full.

If they wont settle for less, then maybe a PIF, which would satisfy the debt, and also avoid any special comment of paid for less.

[Anonymous]

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@RobertEG wrote:

Unpaid bad debt can be a show-stopper in any future quest for credit.  Being excluded from your CR based on its age can shield the unpaid debt from being discovered by a simple pull of your CR, but it is still there.  It is, in my opinion, always best to satisfy any old, delinquent debt.  A mortgage lendor may, for example, simply ask whether you have any old, unpaid delinquent debt.

If they wont accept a PFD, then the next best thing is to attempt a settlement for less, with their agreement not to report a paid for less special comment.

Your CR would then appear the same as if paid in full.

If they wont settle for less, then maybe a PIF, which would satisfy the debt, and also avoid any special comment of paid for less.

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Since the comment doesn't influence the score, does the "Settled for Less" line only influence the person looking at the Trade Line?

[Shogun]

Yes, it could make a difference on a manual review.

[Anonymous]

Ok, thanks. This is what I was looking for.

I had been led to believe that the settlement affects the raw FICO number. But it looks like the real affect comes into play during the manual review.