Rebuilding Your Credit

[Breakthecycle2]

I have two CO from '04. My question is, is it better to pay them (if a PFD is not an option) or let them fall off? Basically, will I receive a score boost if turned to paid?

[Wonderin]

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Breakthecycle2 wrote:
I have two CO from '04. My question is, is it better to pay them (if a PFD is not an option) or let them fall off? Basically, will I receive a score boost if turned to paid?

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Yes ... and no. You will NOT receive a score boost (since FICO sees collections as collections, whether unpaid or paid -- it's all the same to FICO), BUT it's been said that unpaid COs can prevent some CCCs from approving you for new credit. And paid collections will look oodles better to a lender under a manual (read: human) review.

[Breakthecycle2]

Thanks wonderin!

Question for you...with your "old" scores, what were you able to get approved for? CC wise.

[cadavis0609]

Why is PFD not an option?

[RobertEG]

From a FICO status, paying or not paying does not, has been said, have any affect on when it will fall off your CR.

I would be concerned more with SOL/legal action. 

[Wonderin]

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cadavis0609 wrote:
Why is PFD not an option?

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Well, for one, the OC/CA might have consistently refused PFDs. That happens a LOT, unfortunately.

[Wonderin]

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Breakthecycle2 wrote:

Thanks wonderin!

Question for you...with your "old" scores, what were you able to get approved for? CC wise.

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Yep. Only one, though. Orchard Bank. Started off with the scores in my siggie (though possibly a tad bit lower, can't remember) and CLIed at activation -- went from $300 to $500.

Once Orchard began reporting, was able to get a Cap One for $300 Second statement cut this morning, so in a few days, once my "second statement payment" posts, I'll call and see about a CLI! I know everyone says not to push your luck during the "credit crisis" for fear of CLD, but I figure, I don't think they COULD go lower on me!!

[llecs]

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Breakthecycle2 wrote:
I have two CO from '04. My question is, is it better to pay them (if a PFD is not an option) or let them fall off? Basically, will I receive a score boost if turned to paid?

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Actually you could possibly see a score boost by paying off a CO without a PFD if it is a CC. Sometimes, but not always, CCs will continue to report a balance after a CO and that could factor into utilization. One way to tell is to pull the myFICO TU and EQ reports. There is a chance that on page 2 or 3, of the things helping or hurting you, you may have a utilization % listed. You'd have to do some math, but if that percentage is higher than your overall utilization on the cards you have now, then that CO CC maybe factoring into your score via utilization. If so, then paying it would likely result in a score increase.

For example, DW had a CapOne CO. When we started repair, she had 0 CCs, but the utilization was listed at 300%. Why? The CL was $250 when it closed and the balance was at $750. When listed as paid (actually CapOne sold it), she had a significant score increase.

[llecs]

If you opt for a PFD, then never ever give up. I like to use the example of my Verizon Wireless. They never accept PFDs. I had sent dozens and dozens without any luck and got maybe 30-40 NOs. Finally, one hit the right person, and poof, it was gone after a payment.

They told me everything: "it is illegal", "it is wrong", "it is unfair to the others we said no to", "we lose money", "it will improve your score to pay without a PFD", etc. Just wade through that and find a "Yes".

[Breakthecycle2]

Thanks for that!