Just getting started with rebuilding my credit but already need help!

[Anonymous]

Hello all,

I have begun the process of trying to improve my credit score and would be grateful of any advice you can provide.

I have several collections which I can now pay in full but am not getting a favorable response from some of the CA's.

1) Medical bill sent to CA for $37 and DOFD was 12/04, I sent a PFD letter to the CA and they called me and said because the item was so old they would not agree to my settlement offer and that the collection had now accrued a lot of interest (not sure of the amount). I requested that they send me DV but never heard back. Should I go straight to the OC with a PFD letter or should I send my own DV letter to the CA?

2) Non-medical bill sent to CA for $820 and DOFD was 12/08, I spoke with the CA by phone because I wanted to find out the status of the debt (big mistake I know) and I asked about a PFD agreement. They told me they do not, under any circumstances delete items from CR's. Not sure what to do now...do I send the PFD letter I've already prepared? Or start over with them and send a DV letter?

3) I have a couple of collections listed on my reports TWICE or 3x! For example, I had a credit card that was charged off, taken on by a CA and then they sold it to a SECOND CA. (The first CA and the OC both list a zero balance/charge off/sold to another creditor). How do I handle this situation? Do I only have ammunition enough to deal with the 2nd CA and send them a PFD letter and then send GW letters to the OC & 1st CA?

I think my main issue is that I do not understand whether paying off a collection account will actually help my score or hurt it. There seems to be a debate on this issue. If I am not able to get the items deleted, will my score be better off if I have the item listed as PAID IN FULL or am I better off not paying it at all and waiting the 7.5 years for it to drop off?

Help! I am trying very hard to get straightened out here but it is so overwhelming I am not sure what to do! 

[RobertEG]

There is really nothing to debate as far as CR deletion based on payment of a debt.

If if you just pay, that does not requrie any deletion of any prior reporting by either the OC or CA made to your CR.  Since FICO scores drogs in your CR, and does not score the status of a debt itself, payment will also not improve or detract from your credit score.

What IS debatable is how to handle unpaid debt.

Unpaid debt has many levels of prior credit reporting, and many levels of future credit reporting and legal perils, if the debt remains unpaid.

If the debt has been placed for collection, which appears to be your main concern, the CA can take legal action for recovery of the debt.

If you just PIF, the debt is fulfilled, and thus the threat of legal action is gone.

But a PIF does not result in any removal of anything from your credit report.

If you want to hold out on payment by first attempting a request for CR deletion in exchange for your payment, your PFD letter may be accepted by the CA, and then you become a big winne!. 

But the CA does not have to even consider, respond to, or accept any PFD request. They can choose to just let it remain in your CR, or they can choose to bring legal action for court ordered judgment on the debt.  If you take the PFD gamble, then it is recommended that you first know whether, if they should choose to bring legal action for collection of the debt, whether you can go into court and get their legal action dismissed on the basis of expiration of the statute of limitations (SOL) on the debt.

[Anonymous]

Thank you so much for your reply RobertEG! I appreciate your advice.

I guess what I meant to say was if a CA will not delete the listing on my CR in exchange for payment, and I decide to PIF, will my score:

a) improve because I'll have the derog listed as PIF?

-OR-

b) will my score decrease because the listing will be on my CR for an additional 7.5 years because the DOLA was updated?

-OR-

c) will my score stay the same?

Thanks again for the advice!

[llecs]

C is the likely answer. Your FICO score will never improve if you pay a CA. There is a slight chance that it can drop, if that TL hadn't updated in quite some time. Paying it will never make it report for longer. It'll still be deleted on schedule whether or not you pay it. DOLA has nothing to do with how long something reports. DOFD does, but nothing can change that date.

[Anonymous]

Ok thank you. I think I understand now. I appreciate your help!