Dealing with old collections and rebuilding credit

[mcas85]

My credit has been slowly and steadily increasing since I took action in trying to improve my score. I opened up a secured card and was able to eventually get two unsecured cards and have been making timely payments ever since. Score shot u from low 500 to 615. ( I also paid down my current credit card debt this year).

My goal is to get a mortgage. My loan officer I spoke with told me to pay off my 4 collection accounts. These are OLD. One account is set to fall off my report in a year, while the other two are falling off in 2019. They total about $2,000. If I pay them in full, will that update the date of my debt to show it as a current debt? How much more beneficial is it to pay in full vs settling the debt? I can pay maybe half of them off now. I am confused as some people say it could hurt my score if I pay them off now? What would the best course of action be to improve my score the fastest. Also, I tried speaking with the agency about "pay for delete" and they all said absolutely not lol. Any advice will help. Thank you

[RobertEG]

Whenever the debt collector reports an update, it informs the CRA that the debt remained delinquent up to that date.

FICO chooses to treat that fact as an extension of the delinquency on the debt.

However, the new status of paid terminates any future such updates.

Score improvement can be obtained if the collection is deleted from your credit report.

It is common to first make the debt collector a pay for deletion offer, which, if accepted, will result both in satisfaction of the debt and deleiton of the collection.

If you have offered a PFD and they have declined, you might contact someone in a higher management postiion who has the authority to grant an exception to any general non deletion policy.

[Anonymous]

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@RobertEG wrote:

Whenever the debt collector reports an update, it informs the CRA that the debt remained delinquent up to that date.

FICO chooses to treat that fact as an extension of the delinquency on the debt.

However, the new status of paid terminates any future such updates.

Score improvement can be obtained if the collection is deleted from your credit report.

It is common to first make the debt collector a pay for deletion offer, which, if accepted, will result both in satisfaction of the debt and deleiton of the collection.

If you have offered a PFD and they have declined, you might contact someone in a higher management postiion who has the authority to grant an exception to any general non deletion policy.

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I'm going to piggy back off of this instead of creating a new thread with similar questions.

1. For clarification, if there is an old account (let's say over three years old) that shows as "Closed" but with a balance, do you still contact and offer to PFD, and if the offer is accepted, that will remove it from your CR and, in theory, help improve your score?

2. If a negative remark is from a company you still are doing business with, your habits have improved and negative remarks from a 1.5-2 years ago are still on your report, has anyone heard of those negative remarks getting removed? If there are more than one from that time period, have companies been willing to remove some/all of those negative remarks with a long term loan (student loans in particular)?

[RobertEG]

If the account is a revolving account, such as a credit card or LOC, then an upaid balance will continue to affect your % util, and paying will remove the negative score impact on utilization even if the account/derogs are not deleted.  That applies even if the account is closed.

If you can also gain a pay for deletion of any derogs, then you will additionally remove the negative impact on your scoring under payment history.

[Anonymous]

This was incredibly helpful. I'm about to spend my lunch hour contacting a credit card from 2012 that is still on my report, with less than $100 on it! (I was just stupid). If I can PFD and remove that credit util, maybe my rebuild journey would be even better. 

Thank you.

[Anonymous]

Depending on what state you're in it may be out of the SOL and due to that you can offer 50% of the amount for a pay for deletion they'll accept it 90% of the time.