Physically ill from new collection!!!!!

[LCD328]

When I received an alert about a new collection posted to my credit report, I thought I was going to be physically ill. It was a 120 dollar water bill. I had moved last year, had the water turned off and gave the water company my forwarding address to send the bill left over after my deposit was deducted. When I seen the collection was from that, I immediately called the water company and paid the bill the same day it posted as a new collection to my credit report. But after reading some posts, I'm wondering did I make a mistake paying them instead of the collection agency they turned it over to.

Will it make a difference in sending the collection company a goodwill letter for deletion of the paid in full debt. It's a local collection company that I literally pass by everyday going to work. I can't believe that I didn't pay this bill when I got it. I KNOW how much this kind of collection can damage my CR. Two of my credit scores have dropped over 44 points each.

Someone please tell me that I can possibly fix this. I haven't had a late payment on anything in over 9 years. 

[sarge12]

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@LCD328 wrote:

When I received an alert about a new collection posted to my credit report, I thought I was going to be physically ill. It was a 120 dollar water bill. I had moved last year, had the water turned off and gave the water company my forwarding address to send the bill left over after my deposit was deducted. When I seen the collection was from that, I immediately called the water company and paid the bill the same day it posted as a new collection to my credit report. But after reading some posts, I'm wondering did I make a mistake paying them instead of the collection agency they turned it over to.

Will it make a difference in sending the collection company a goodwill letter for deletion of the paid in full debt. It's a local collection company that I literally pass by everyday going to work. I can't believe that I didn't pay this bill when I got it. I KNOW how much this kind of collection can damage my CR. Two of my credit scores have dropped over 44 points each.

Someone please tell me that I can possibly fix this. I haven't had a late payment on anything in over 9 years. 

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If it makes you feel better a paid in full collection may not hurt your score as much as you think...if it was under 100 I think fico 08 disregards entirely. A paid in full collection is disregarded regardless of amount in fico 09 as well as VS 3.0. It may even be disregarded in fico 08, because I think it is unpaid collections under $100 that is ignored. So you may be very much mistaken about how much you KNOW about the harm of this collection.

[Anonymous]

It will keep your scores down until it is deleted even though its paid. A collection is a major derogatory on your files.

A paid collection looks much better than an unpaid collection upon manual review for future creditors.

[sarge12]

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@Anonymous wrote:
It will keep your scores down until it is deleted even though its paid. A collection is a major derogatory on your files.

A paid collection looks much better than an unpaid collection upon manual review for future creditors.

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Not true on fico 09 donny10....As more creditors start using the new model, this derogatory will be increasingly ignored. I will say it again Fico 09 does not include paid collections in the scoring model...it does not even include unpaid collections under $250. It will of course still affect mortgage lending which has by and large not even adopted Fico 08. Credit cards and many installment loans will most likely switch to the newer model, as many already have. I would try to have it removed if I were the OP, but if they can't this one paid collection account on an otherwise blemish free credit profile will probably not be as harmful as some might think.

Edit...While all else above is true, and I read the part about unpaid collections under $250 on a site...this part may not be true, I am unsure of this. I am sure that PAID collections are not even included in Fico 09 scoring...regardless of amount, so simply paying a collection will result in a score increase. Keep in mind it will still be on the credit report!! If any older fico scoring model is used, it will still have a score effect. Often, mortgage lending will include a 3B credit report, and involves some level of manual Underwriting, and how much the paid collection account matters is dependant on the lender. In the OP case, with an otherwise clean profile, I believe many mortgage lenders would view this as a one off mistake, rather than an indication of credit problems...especially considering it was paid so quickly.

[Anonymous]

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@sarge12 wrote:

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@Anonymous wrote:
It will keep your scores down until it is deleted even though its paid. A collection is a major derogatory on your files.

A paid collection looks much better than an unpaid collection upon manual review for future creditors.

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Not true on fico 09 donny10....As more creditors start using the new model, this derogatory will be increasingly ignored. I will say it again Fico 09 does not include paid collections in the scoring model...it does not even include unpaid collections under $250. It will of course still affect mortgage lending which has by and large not even adopted Fico 08. Credit cards and many installment loans will most likely switch to the newer model, as many already have. I would try to have it removed if I were the OP, but if they can't this one paid collection account on an otherwise blemish free credit profile will probably not be as harmful as some might think.

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Until they do switch to FICO 9, this collection account WILL keep the OP's score down.

The OP was wacked 44 points. That's not going to recover because it was paid anytime soon with FICO 8 and other FICO models. Right now that's the score a whole lot of lenders use.

[Anonymous]

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@sarge12 wrote:

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@Anonymous wrote:
It will keep your scores down until it is deleted even though its paid. A collection is a major derogatory on your files.

A paid collection looks much better than an unpaid collection upon manual review for future creditors.

---

Not true on fico 09 donny10....As more creditors start using the new model, this derogatory will be increasingly ignored. I will say it again Fico 09 does not include paid collections in the scoring model...it does not even include unpaid collections under $250. It will of course still affect mortgage lending which has by and large not even adopted Fico 08. Credit cards and many installment loans will most likely switch to the newer model, as many already have. I would try to have it removed if I were the OP, but if they can't this one paid collection account on an otherwise blemish free credit profile will probably not be as harmful as some might think.

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Another thing to remember is that approvals are not based on scores alone. 

Although FICO 9 will ignore any collection with a zero balance, it will still remain on your reports until reporting time expires. 

Which ever way you look at it, the collection is derogatory, maybe not by FICO 9 but manual reviews and banks approval policies other than scores.

[sarge12]

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@Anonymous wrote:

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@sarge12 wrote:

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@Anonymous wrote:
It will keep your scores down until it is deleted even though its paid. A collection is a major derogatory on your files.

A paid collection looks much better than an unpaid collection upon manual review for future creditors.

---

Not true on fico 09 donny10....As more creditors start using the new model, this derogatory will be increasingly ignored. I will say it again Fico 09 does not include paid collections in the scoring model...it does not even include unpaid collections under $250. It will of course still affect mortgage lending which has by and large not even adopted Fico 08. Credit cards and many installment loans will most likely switch to the newer model, as many already have. I would try to have it removed if I were the OP, but if they can't this one paid collection account on an otherwise blemish free credit profile will probably not be as harmful as some might think.

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Until they do switch to FICO 9, this collection account WILL keep the OP's score down.

The OP was wacked 44 points. That's not going to recover because it was paid anytime soon with FICO 8 and other FICO models. Right now that's the score a whole lot of lenders use.

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The 44 point drop was probably before the credit report updates to show paid, and while Fico 08 fails to reward paying this collection, an attempt to get the derog. info removed is more likely due to the quick payment. My last credit card app was almost certainly a fico 09 pull. The change to the Fico 09 treatment of paid collections was done at the lenders urging, so there is reason to believe lenders will soon be switching to this scoring model. More than many realise already have. It would be good to know what the OP credit score is now, after the drop. If it dropped from 820 to 776, in a practical sense, the only real harm would be to the OP's pride. I'll say again...I would attempt to have it removed, but with an otherwise pristine credit file, failure to get it removed may not be devestating.

[LCD328]

Is there any way to have it removed? Do I send a goodwill letter to either the utility company or the collection agency? I'm not interested in buying a house, but will be buying an RV in the next few months, or at least I was until this happened. 

[sarge12]

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@LCD328 wrote:

Is there any way to have it removed? Do I send a goodwill letter to either the utility company or the collection agency? I'm not interested in buying a house, but will be buying an RV in the next few months, or at least I was until this happened. 

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It could not hurt to try both, I can not say what the chaces are. I have never tried to have anything removed. If there is anything errant in how it is reporting, you might could dispute, but if accurately reporting, dispute is discouraged, and definately try for goodwill removals first. Too bad it is not under $100, as fico 08 ignores collections under $100. If you can not get it removed, and the RV financing is denied, you can ask for reconsideration and point out this was just 1 mistake and likely gain financing with manual review.

[Anonymous]

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@LCD328 wrote:

Is there any way to have it removed? Do I send a goodwill letter to either the utility company or the collection agency? I'm not interested in buying a house, but will be buying an RV in the next few months, or at least I was until this happened. 

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There are many ways of having it removed. I had countless chargeoffs, utility bill chargeoffs, repo's, collections, judgements and lates. You name it, I had it.

I paid and or settled EVERY SINGLE one of them and then had EVERY SINGLE one of them deleted, and I mean deleted permanently. No worries of them EVER returning.

Now my situation was much much worse than yours, lol! I took 3 months off from work and worked 10 hrs a day on repairing my credit, 7 days a week. No lie, no exaggeration.

Is the original creditor and the collection agency reporting? 

Either way, send a GW removal request to whoever is reporting. Do some research and find out who the CEO and the leadership team members are. Those folks are the people you want to read your letter. Make the letter compelling to the person that will be reading it. Be persistent but respectful.

During my repair, I once hopped on a plane and went to a CA and begged to speak to a higher up about my situation and got a GW deletion. Don't even ask which one because I won't tell you!

You can do it OP.