HELP: Do I pay this debt or not????

[kimpeay]

One of my debts hit its 7 year mark earlier this month, and my score (EQ) jumped 20 pts to 665. Needless to say I an elated!

I do have one more bad mark on my credit. I have a GE Account (OC) that wont fall off my credit until December 2015. It was sold to another company Asset Acceptance (CA) in September 2011. The total amount is only around $1500. They've offered a settlement for $400.

Here's how it shows under my EQ report (via myFICO):

Aac		9/2011	$0	120+ days past due		Details
Gecrb/Ritz		11/2008	$0	Bad debt/collection		Details

It reflects a zero balance on both the CA and OC. Neither is being listed as a "Collection" on EQ my report, but both are listed as "Accounts" with negative indicators. So of course it would be obviously unwise to pay the full $1500. 

I pulled EX a while ago and the CA listed as "Paid, Closed" wit the OC listed as "Closed, Written off"... Pretty much the same as EQ, not showing as a "collection", but as "Acconts" with negative indicators.

Now...... On my TU report from myFICO, The OC GE/Ritz shows a status of "Charged off as bad debt" with the same $0 balance under "Accounts" with negative indicators... The CA Asset Acceptance (AAC above) DOES show up under "Collections" with the original balance of $1,393, rather than just under "Accounts" with negative indicators. 

The question is, do I pay this debt or not??? Will it really make a difference? Would it improve my score in any significant way? Or would i be throwing $400 away? I could use that and get a Secured CC from my bank and REALLY bump my score up. It seems as if I should pay it for TU's sake, but it wont really matter on EQ or EX. The CA (Asset Acceptance) are saying it will report as "Paid" or "Paid as Agreed" with the same $0 balance rather than "Settled" which is good. How much of a benefit is it to get those "negative indicators" off my account?

Hope i'm not confusing you guys too much! Any help is appeciated. Thank you.

Current situation:

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Credit History 10 years

Average age of accounts is 6 years

2 Accounts with negative indicators (only 1 Account in TU, second account considered a Collection)

0 Current Accounts With Balances (I have no revolving installment loans, mortgages, revolving lines of credit, or credit cards)

0 Past Due Accounts

0 Accounts opened in the past year

2 Recent Inquiries (which came before the score jump)

0 Collections (1 Collection in TU)

0 Public Records

[guiness56]

Paying a collection will not improve your score.  FICO scores paid/settled and unpaid collections the same, as a collection.

I would try a pay for delete with them to have the TL removed upon payment.

[RobertEG]

As long as any legitimate debt remains unpaid, credit report exclusion of adverse information reported by either a creditor or debt collector does not alter that fact.

Credit report exclusion acts to shield others from awareness of the unpaid debt by way of a simple pull of your credit report.

However, a prospective creditor can still become aware of the delinquent debt by other means, such as simply asking if you have any unpaid debt, or questioning the lack of showing of reported satisfaction of a debt reported to your file.  That alone, aside from any issues of impact on your score, could become a basis for denial of future credit.

It is never, in my opinion, good advice not to pay a delinquent debt, aside from the fact that to recommend not to pay would be a violation of the terms of service of this site.

[kimpeay]

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@RobertEG wrote:

As long as any legitimate debt remains unpaid, credit report exclusion of adverse information reported by either a creditor or debt collector does not alter that fact.

Credit report exclusion acts to shield others from awareness of the unpaid debt by way of a simple pull of your credit report.

However, a prospective creditor can still become aware of the delinquent debt by other means, such as simply asking if you have any unpaid debt, or questioning the lack of showing of reported satisfaction of a debt reported to your file.  That alone, aside from any issues of impact on your score, could become a basis for denial of future credit.

It is never, in my opinion, good advice not to pay a delinquent debt, aside from the fact that to recommend not to pay would be a violation of the terms of service of this site.

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Thats what i was thinking. I dont know if lenders check just the 3-digit score or if they really go through the report and check the negative accouts. While paying this debt may or may not raise my score, at least it will make my report look somewhat more positive than before.

[guiness56]

Yes, lenders will go through your report. 

[proudnavymom]

A couple of years ago I had an account with Asset Acceptance.  I believe the balance owed was around $1000.  They offered me a settlement of $99 for this account.  I tried to get them to agree to a PFD, but they refused, but they did agree to report it as simply paid, not settled for a lesser amount, so I paid the $99 settlement offer.    Within a few months, the account was deleted off all credit reports without me asking or without it being outside the CRTP. 

[kimpeay]

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@proudnavymom wrote:

A couple of years ago I had an account with Asset Acceptance.  I believe the balance owed was around $1000.  They offered me a settlement of $99 for this account.  I tried to get them to agree to a PFD, but they refused, but they did agree to report it as simply paid, not settled for a lesser amount, so I paid the $99 settlement offer.    Within a few months, the account was deleted off all credit reports without me asking or without it being outside the CRTP. 

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Wow, that's great news! That helped seal the deal on the decision I was trying to make. I know it's not a guarantee that they'll do the same for me, but it's good to know that it's a possibility. I'm gonna go ahead and call them back after the weekend and take care of it. Thank you for the info!