Collections and scores.

[907grown]

Okay, I have been working on bettering my credit and have focused much of my time and money on collections.  I have made agreements with the collection agency and PFD'd most of them, some were reported more then once, some, not even mine. I have changed my bad ways, no longer writing bad checks and living beyond my means, so with that said, when I started I had 47 collections, yes 47, as of today, I have 3 remaining on my report.  One is 5.5 years, one is 4.5 years, and one is a little over 2 years old.  The CA that has these three will not work with me at all on them, PIF, and no way on the PFD. Because of my efforts, they were just recently rereported, what should I do about these, and with a large # of collections falling off all at once will I see any change to my score?

[haulingthescoreup]

Awesome work! Congratulations, and especially congrats on changing your ways.

Did you have any collections "younger" than the one that is a little over 2 years old? If so, then you might see some score improvement, because scoring is driven by recency + severity + frequency. The more recent the collection (or other negative), the more it hurts.

Otherwise, there might not be a lot of score change. But I do hope that you'll feel proud (and cheered!) about the work you did. It just means that it will be that much easier to finally get back into good credit standing, when these final ones do start falling off.

[907grown]

Yes, there were some newer ones, and I am not sure why, but a few of the collections that were removed were paid previously and were 5-6 years old.

[Anonymous]

I have a related question - in the "Education" section of the website it states "Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years." - How does paying off the more recent accounts help when the collection stays on your credit report for 7 years? 

My credit report is most negatively effected by my collections.  Only my "Payment History" section is listed as bad; all others are either very good or great.  Basically, I would just like to get a better understanding of how paying off my collections will help my credit score (both near-term and long-term).  Also, it would be nice if the FICO simulator offered "Paying off collections" as a specific option.

[907grown]

I agree, being someone who had many collections, they should simulate what getting them off of there will do.  You can do what I did and call and ask for PFD's, the CA's that I talked to just wanted to collect, and it's much easier to collect when they are willing to work with the consumer, kind of a "you scratch my back and I'll scratch yours" thing.  The only CA that would not work with me that is holding the last 3 collections on my report is not getting paid.  They refused to do PFD and so therefor I did not pay it.  Since paying it off will make no difference, then I'm not paying them.  I will make the same offer to them again in another month or so. One of them, I'm really not sure when I incurred it, it's possible that it is mine, but I am not completely sure so I am debating doing a dispute through EQ.  Need to find out for sure if it's mine first though.

Best of luck with your collections!

[AndySoCal]

The more recent the derogatory item occured the greater the impact on your score. As the derogatory item gets older the less the impact on your score. The one thing you want to be careful in doing is paying old derogatory items. If you just pay the account when the account re-reports the score model translate that as a new derogatory item and can and will lower your score. Typically not true in all cases collection accounts report once when they are opend and once when they are paid or deleted. I would try to fix the most recent collection account (newer date opened) first. The first strategy is to try to get a pay for delete (PFD) if you know you own the debt. If the original creditro still has control of the account you can try to pay in full (PIF) in exchange for them pulling the collection account back. The pulling of the collection account back will cause the collection agency to remove it from your report. Also, never believe what collection agency says they will say anytrhing to get you to pay the money. If you have to talk to them get everything in writing first on their letterhead then pay the money. Some in this forum suggent using a money order so that you do give them your bank account info. Hope this helps.

[Anonymous]

Absolutely helps - thanks!