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Valued Member
Starr79
Posts: 34
Registered: ‎09-27-2011

Does paying off old debt really drop your score?

I thought the reason you need to try for a PFD was becuse paying a collections account can hurt your score. Then I read "At myFICO we always recommend paying off your legitimate debts, and paying off old collections won't hurt your FICO score."

 

Did this change in recent years?  I am going to try for PFD on a couple of accounts but if they wont delete I would like to just settle with them and be done with it.

 

Thoughts?

Moderator
Shogun
Posts: 10,926
Registered: ‎04-15-2011

Re: Does paying off old debt really drop your score?

Paying off old debts won't hurt your score, but it won't help it either.  A PFD will remove the collection and could help your score.


Starting Score: 504

Current Score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+

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Valued Contributor
DaveSignal
Posts: 1,750
Registered: ‎07-29-2011

Re: Does paying off old debt really drop your score?

Forgetting about your FICO score, paying off those collections is the right thing to do and will be looked on more favorably in manual review than having outstanding balances.  There are also certain jobs, including my own work, that will see you as a liability with outstanding debt on your credit report.  Employers see it as though if you owe money, you are likely to sell your secrets, and therefore you don't belong at the position.


FICO Scores: EQ:712 TU:767 EX:706
Barclays Arrival World MasterCard $6.5k - BoA Travel Rewards Visa Signature $15k - SDFCU EMV $15k - NFCU goRewards $20k
Valued Member
Starr79
Posts: 34
Registered: ‎09-27-2011

Re: Does paying off old debt really drop your score?

Thanks.

 

Do you know why Myfico would have the same debts listed differently on my Myfico Equifax vs my Myfico TransUnion reports? I have 3 collections that are on the Accounts tab with my Equifax showing big red flags and affecting my score and on My Myfico Trans Union report they are only listed on the collections tab. Equifax is showing 45 points lower and technically has more colledctions on the collections tab, so I know this has to be why. I would think collections tab would be where they should be since they are collections and not active accounts.

Moderator
Shogun
Posts: 10,926
Registered: ‎04-15-2011

Re: Does paying off old debt really drop your score?

Some of the CAs are coding themselves now as Factoring Agencies and gettinp put in the accounts section.


Starting Score: 504

Current Score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+

Take the myFICO Fitness Challenge

Going for Wade64's RUDY Spade!
Contributor
diabla
Posts: 230
Registered: ‎10-01-2012

Re: Does paying off old debt really drop your score?

[ Edited ]

" Employers see it as though if you owe money, you are likely to sell your secrets, and therefore you don't belong at the position."

 

Yes, but don't most people owe money, of some amount?

 

Valued Member
Starr79
Posts: 34
Registered: ‎09-27-2011

Re: Does paying off old debt really drop your score?

Shogun--Is that something that can be fixed by CRA? Is it legal to list themseleves as a factoring comany?

Community Leader
Valued Contributor
DaveSignal
Posts: 1,750
Registered: ‎07-29-2011

Re: Does paying off old debt really drop your score?


diabla wrote:

" Employers see it as though if you owe money, you are likely to sell your secrets, and therefore you don't belong at the position."

 

Yes, but don't most people owe money, of some amount?

 


The amount doesn't matter.  If you have a collection with more than $0 balance and aren't at least actively working to reduce that balance, no clearance for you.


FICO Scores: EQ:712 TU:767 EX:706
Barclays Arrival World MasterCard $6.5k - BoA Travel Rewards Visa Signature $15k - SDFCU EMV $15k - NFCU goRewards $20k
Moderator
Shogun
Posts: 10,926
Registered: ‎04-15-2011

Re: Does paying off old debt really drop your score?

Some CAs have figured out the loophole, now there are more and more doing it.  Until someone actually busts them on it, they will continue to do it.


Starting Score: 504

Current Score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+

Take the myFICO Fitness Challenge

Going for Wade64's RUDY Spade!
Valued Member
Starr79
Posts: 34
Registered: ‎09-27-2011

Re: Does paying off old debt really drop your score?

[ Edited ]

Dave it looks like your last EQ FICO was 680. Your fired.


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