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Valued Member
tuckandroll
Posts: 31
Registered: ‎08-15-2012
0

120 late or paid collection - which is better?

[ Edited ]

Hi Experts,

I have a question regarding scoring.  I am trying to get one of my scores up a little, and think I found a way. Before I start any disputes I wnat to be sure it won't hurt me any if that's possible.

 

EX is my weak score @ 646 and TU is my strength @ 692

 

The reports are exactly the same, everything is reported the exact same except one item. 

Verizon collection account last activity Aug 2011

EX is showing 120 day late - $0 balance

TU is showing payment after charge off/collection PAID (edit)

 

Would it make sense that 120 day late hurts more than a paid collection?  If so I would lobby to have the status changed to paid after collection. 

 

Please give me feedback if you have any info on these matters.

 

Thanks a lot.

 

 

- 6/2012 - FICOs EX 550 TU 580
- Lots of work.....
- 9/20/12 - FICO EX 646 TU 692
- Dec 12 - Home purchase - May 13 Auto Purchase
- 6/10/13 - FICO EX 672 TU 690
It CAN happen to you!
Mega Contributor
RobertEG
Posts: 17,824
Registered: ‎03-19-2007
0

Re: 120 late or paid collection - which is better?

First, current status of paid is a payment status, not a delinquency status.

 

As an account accrues delinquencies and derogs, each are reported and stored separately in your payment history profile.

Current status is updated whenever a new level of reported delinquency occurs.  Current status is a snapshot of, well, current account status.

It is a hybrid reporting code, which while an account is delinquent, records the current level of delinquency, such as 120-late, referred for collection, etc., and once paid, records the status of paid.  It then no longer reflects any delinquency status.

 

The level of delinquency prior to paid current status is retained in a separate code called your Payment Rating.  And all individual delinquencies are retained under your payment history profile. 

 

The current status of the account is correctly reflected in your TU report, which shows paid.  EX is still showing delinquency level, which the creditor should have updated when the debt was satisfied.  Good to correct, but it is reporting a $0 balance, so no biggie.  It is showing as satisfied.

 

As for which is worse, 120 lates and collections are both major derogs.  Whether FICO scores more for a collection than a serious monthly delinquency is kinda unclear, but the highest level is the one that hurts most.  Probably the collection.  Both are reported by different parties.  The potential significance of both reporting is that if you should, for example, obtain deletion of the collection, the 120-late will still be a scored major derog in your CR, and thus unless it is also deleted, the effect of deletion of the collection will have much less impact.

 

Get the account updated to a current status of paid, which is the accurate current status.  However, that does not affect the 120 or collection reporting issue.

 

 

Established Contributor
bettercreditguy1
Posts: 759
Registered: ‎02-11-2012
0

Re: 120 late or paid collection - which is better?

If you are unable to get the 120 day reporting late off of your record either by good will or trade deletion, it will fall off of your record in about 7 years. Until then, it will hold back the rise of your Fico scores.

Starting scores 01/02/2012 EQ 707(Fico) TU 733(Fico) EXP 735 (FAKO)
Updated scores 06/01/2014 EQ 797(Fico) TU 768(Fico) EXP 769 (Fico), EQ 849 (Next Gen 5/27/14 Penfed)


Remember the Three P's: Pay early in Full, Pay on Time, Patience
Valued Contributor
AndySoCal
Posts: 1,941
Registered: ‎04-07-2009
0

Re: 120 late or paid collection - which is better?

You cannot have a zero balance and be 120 days late at the same time. You can bew 120 days late prior to the date you paid the account. Technically it is inaccurate.reporting. You can dispoute it if you like. If you have  proof of payment on the acount submit iit with the dispute. OS that thye will not push the 120 days late back one month. Not sure how much if any this will your score. I would try for a good will deletion of the account.

Equifax My FICO score 815 5/28/2012, 818 on 7/28/2014 . Average of Accounts 12 years and no Installment accounts. MyFICO TU 810 6/26/2012 809 4/21/2013 MyFICO XPN -805. 2/26/2014 Discover TU FICO 813 App free since 9/2011
Valued Member
algorithmslave
Posts: 68
Registered: ‎09-10-2012
0

Re: 120 late or paid collection - which is better?

I have a charge off that reports 120 days late each month. I just sized my score and report with someone who has a bankruptcy two years old. My EQ score only beats them by 20 pts....This would imply a paid collections is better than a so called weaker 120...Explain the bankruptcy situation vs mine and enlighten me please. Their average account history is 7 years mine is 5 their oldest account is 13 mine is 13 as well. They have 7 negative accounts with 1 public record. I have 4 with no public records. In addition, I have 7 current good accounts were they have 4. Our debt to credit ratio for revolving credit is the same at 20 percent. If Issac is Fair, than explain this? 

You can wrap me in your flag, make me say a praise to your creator and make me spend your currency, but remember this, I am a loyal servant to Justice and a Patriot to none. I am free...
Valued Member
tuckandroll
Posts: 31
Registered: ‎08-15-2012
0

Re: 120 late or paid collection - which is better?

not posative but your compaired to others for scores in each category by each bureau.  I have length of history over 11yrs, its a positive for TU but a neg for EQ.  They always rank me different.  This may not be due to the 120 vs paid Colleciton. 

 

- 6/2012 - FICOs EX 550 TU 580
- Lots of work.....
- 9/20/12 - FICO EX 646 TU 692
- Dec 12 - Home purchase - May 13 Auto Purchase
- 6/10/13 - FICO EX 672 TU 690
It CAN happen to you!
New Member
SheltieOwner
Posts: 6
Registered: ‎08-20-2011
0

Re: 120 late or paid collection - which is better?

tuckandroll,

 

My husband has the same exact issue, but with TU (724) and EQ (709). I've helped him try everything to get that 709 up to a 720, but it won't budge. We submitted a dispute on 11 Sept to get the 120 day late $0 balance changed to a $0 balance collection. I'm with you on this one... I think his score will increase dramatically once the collection is applied in place of the 120 late (of course, I could be also be wrong). If you would like to wait, I can share with you the outcome of our experience once the dispute is resolved. I'm not sure how much of a hurry you are in. I expect it will take about 30 days for it to be finalized.

 

Why do I think this will work? I think having a collection vs. only missed payments puts you in a different scoring bucket. In a bucket with other people with collections he looks awesome, but in a bucket with only missed payments he looks only so-so. We're going to be applying for a mortgage in November and my goal has been to help him get all three of his scores at/above 720. This is my last shot. Wish us luck!

New Member
SheltieOwner
Posts: 6
Registered: ‎08-20-2011
0

Re: 120 late or paid collection - which is better?

tuckandroll,

 

I have your answer for you! I just applied for a pre-approval on a mortgage. You said you are trying to get your score up a few points. If you will be applying for a mortgage, DO NOT change it to a collection. According to my lender, FICO calculations for mortgages work differently than any other loan. Your FICO scores will go down if you report a collection instead of just a 120 day late. On the TU, for the mortgage FICO, it recalculated my husband's once decent 724 to a 698. This became his lowest score. So, something to seriously consider is what you are trying to get the extra points for. If it is for a mortgage, know that the expected outcome is that a collection is received worse than a simple missed payment. For other loans, it may be different. I won't know until the dispute is fully processed how it affects the overall FICO. Hope this helps!

Moderator Emeritus
llecs
Posts: 32,881
Registered: ‎08-04-2007
0

Re: 120 late or paid collection - which is better?


SheltieOwner wrote:

tuckandroll,

 

I have your answer for you! I just applied for a pre-approval on a mortgage. You said you are trying to get your score up a few points. If you will be applying for a mortgage, DO NOT change it to a collection. According to my lender, FICO calculations for mortgages work differently than any other loan. Your FICO scores will go down if you report a collection instead of just a 120 day late. On the TU, for the mortgage FICO, it recalculated my husband's once decent 724 to a 698. This became his lowest score. So, something to seriously consider is what you are trying to get the extra points for. If it is for a mortgage, know that the expected outcome is that a collection is received worse than a simple missed payment. For other loans, it may be different. I won't know until the dispute is fully processed how it affects the overall FICO. Hope this helps!


Per FICO scoring, a 120 days pat due is just as bad as a CA. What causes the score drop is when a non-updating CA becomes updated with a new update or reported date. If you haven't had a baddie updating in a long time, and it switches to a collection comment, then you can very well see a significant drop depending on when it reported last. YMMV on the FICO version too. 

 

As a side note, your FICO version for TU could come into play into your drop. The FICO version on here is older than what most lenders use. Some can see differences of 10-20-30+ points when compared the same day. Now if your lender is pulling TU98 (some do...not many), then you'd have an accurate comparison.


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