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Moderator Emeritus
Brammy
Posts: 5,436
Registered: ‎03-10-2007
0

That's just the point

[ Edited ]


minonda wrote:
Brammy, if I can prove that I paid this bill in August 2006, will they take it off my credit report? Also, why, if I had a score of 762, would an amount of $46 have that profound an impact on my score? If I proved that I was trustworthy enough to pay many times greater amounts, why would $46 be so important? I didn't even know I owed them that money until I received a notice from them last August (I don't remember when I stopped being a member of the Columbia House DVD club, but it had to be years ago. I never got notices or reminders). Also, I paid the bill, so it should never have ended up in collections.
 
Years ago I had paid off a $1000 account, and somehow forgot to pay $5 of it. This was an account with MBNA. They never notified me that I still owed them $5, and then they posted it on my credit report as over 90 days past due. I got it removed on the grounds that it was ridiculous to penalize me for $5 when I had paid them their $1000.  I guess when it comes to credit scores there is nothing too ridiculous or absurd. It's almost as though they're trying to make it impossible to have a good score.
 
Thanks for your help and advice.


 
You just made thep point, if you have been mostly pristine in your payment history and suddenly a collection shows up, it will hurt your score more.  Why else would someone who is basically on time with their payment stop paying unless they were in financial trouble?  The FICO score is used to predict just that, who's in financial trouble and may be at risk on non repayment.  For me, because my scores were so low at the time, I only took a fifty point hit for you, the penalty is greater.
 
Contact the original creditor and let them know have proof of payment, forward it to them certified mail.  Let them know if it is not removed within 30 days (you have to give them that long to respond) you will contact the FTC.  If its not removed, contact the FTC with a copy of your payment. Do it as soon as possible and make sure you certify with return receipt requested.
 
I'm not sure if its a case of trying to make it impossible to have a good credit score but throwing every possible obstacle in your way to prevent you from obtaining additional credit and basically make your life a nightmare until they get paid.



Message Edited by Brammy on 04-08-2007 11:16 PM
Member
minonda
Posts: 20
Registered: ‎04-08-2007
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I'm sorry, but that makes no sense at all

I didn't know I owed them $46 -- that's why the debt went upaid for so long, not because I was in financial trouble and couldn't pay it, jsut like the $5 I neglected to pay MBNA in 2000, that they decided was worth reporting to the credit bureau. Columbia reported it because their collection agency didn't record the fact that I had paid it. If I could pay over $3000 on my bills in February of 2007, why would I have trouble coming up with $46? My credit score has been over 700 for years -- how is that an indicator of financial troubles?
 
If Columbia House's intention is to make my life difficult for $46 and FICO supports them in this, then this credit score game has truly reached absurd heights. Especially since I paid the money once they brought it to my attention that I owed them. This is the most ridiculous thing I ever heard.
New Contributor
madriley
Posts: 69
Registered: ‎03-07-2007
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"didn't know I owed them $46 -- that's why the debt...

[ Edited ]
"didn't know I owed them $46 -- that's why the debt went upaid for so long, not because I was in financial trouble and couldn't pay it, jsut like the $5 I neglected to pay MBNA in 2000, that they decided was worth reporting to the credit bureau. Columbia reported it because their collection agency didn't record the fact that I had paid it. If I could pay over $3000 on my bills in February of 2007, why would I have trouble coming up with $46? My credit score has been over 700 for years -- how is that an indicator of financial troubles?"
I feel for you. As a parent of a medically fragile child, I have had to deal with the influx of 100s of medical bills over the years. Many are very small. If just one slips through the cracks, it goes on my credit. The fact that is was a $20 copay to a radiologist that didn't have my contact info doesn't matter. The fact that I paid all of the other medical bills perfectly as they came in doesn't matter. I have learned my lesson. I spend hours on the phone tracking each one down to make sure I don't miss anything. A $20 collection hurts your credit just as much as a $2000 collection. It isn't fair. But, that's just the way it is.

Message Edited by madriley on 04-08-2007 09:19 PM
Member
minonda
Posts: 20
Registered: ‎04-08-2007
0

It shouldn't be that way

Logic should enter into the process at some point, since a person's financial capability is at stake. To say that an overlooked debt of $20 amounts to the same thing as a $2000 default is absurd. In my experience with MBNA a few years ago, they removed the negative report because even "they", whoever they are, recognized that if I paid the original $1000 debt off within months of incurring it, the oversight of $5 could hardly be considered a default.
 
For something as important as our ability to obtain goods and services, we should not have draconian rules that are applied across the board regardless of circumstances. To me this is the same as giving the death penalty to someone who steals food because he has no money to buy it. Most of us would raise a hue and cry if someone were to receive such a harsh penalty for a relatively petty offense, yet it's okay for someone who clearly is paying their bills to be tarred by that broad brush because of some alegbraic calculation that decrees that if this condition is present, then another must be also?
 
There must be a way the mathematicians can come up with a formula that allows an obvious indicator like a credit score to mitigate negative information. Otherwise this tool is just like some robot ranging around the room destroying things willy nilly. I must be upset because I have never used the expression "willy nilly" before and I never thought I would.
 
If the SATs were rigged like this, it would have been fixed long ago.
Established Member
Nuggy
Posts: 18
Registered: ‎03-15-2007
0

Brammy's right... the key to the FICO score is prediction...



minonda wrote:
I didn't know I owed them $46 -- that's why the debt went upaid for so long, not because I was in financial trouble and couldn't pay it, jsut like the $5 I neglected to pay MBNA in 2000, that they decided was worth reporting to the credit bureau. Columbia reported it because their collection agency didn't record the fact that I had paid it. If I could pay over $3000 on my bills in February of 2007, why would I have trouble coming up with $46? My credit score has been over 700 for years -- how is that an indicator of financial troubles?
If Columbia House's intention is to make my life difficult for $46 and FICO supports them in this, then this credit score game has truly reached absurd heights. Especially since I paid the money once they brought it to my attention that I owed them. This is the most ridiculous thing I ever heard.





Brammy's right... the key to the FICO score is prediction of the future. If you have an excellent history, the score assumes that you don't forget, make mistakes, etc etc because you've never done so. Once it sees the collection, like Brammy said, that's a red flag that you might be starting to have issues.

The FICO score doesn't care about they why's of a negative, because they can't possibly KNOW why. This is purely a numbers and percentages game... your score drop says that of the people in the group you were in, a single negative is a relatively large risk factor of continued accumulating negatives. In Brammy's case, the numbers already say he hasn't been perfect, so the new negative is less of a surprise.

If you wanted FICO scores to take into account the why's of particular situations, there would be hundreds of thousands of people in a call center, contacting every single person in the country whenever there was any change in their report asking them to explain the change. It'd be overwhelming. There's no choice but to predict you as a higher risk, because the statistics say that new collections for people in your good credit group have a tendency to indicate continued problems.

Consider getting a speeding ticket. You could never have exceeded 55 in your life, but one day you get a ticket because your speedometer got stuck. Your insurance company doesn't care why you were speeding; they'll still raise your rates because of the ticket, even though it wasn't your fault, because that's where overall tendencies lie.

I actually considered being an actuary for a career... these are the people that sit there and do nothing but research the numbers to come up with predictions and tendencies based on what essentially is basic numerical data. That's the hard fact of living in a society of 300 million people. It's impossible to take everyone's individual circumstances into consideration - you have to make generalized predictions.
Member
minonda
Posts: 20
Registered: ‎04-08-2007
0

No, sorry, don't agree

I don't think the analogy of speeding with default on credit is a good one. For one thing, the credit score depends on history. Therefore, past behavior is a factor in the score. With driving, past history can never predict what will happen the next time one drives, because there are too many uncontrollable variables.
 
There must be a way to devise a formula that says, "if x >y, and z <a .. then bla bla bla. In other words, if a person with a score of 600 has a negative for a collection item of $3000, it would count for more negative points than a person whose score is 700 with a collection item of $200. I can't see why a formula can't be devised to take these factors into account. They're aleady in the form of numbers, so they can be compared. No need for a call center.
 
Sorry, but if we're to be judged and our capabilities are to be determined by these numbers, then they must be arrived at by the most specific and sophisticated formulas possible. I don't buy the idea that we should just accept this ridiculous across-the-board way of arriving at our evaluations.
Established Member
Nuggy
Posts: 18
Registered: ‎03-15-2007
0

Are you saying that if you were an insurance company, and...

[ Edited ]

minonda wrote:
I don't think the analogy of speeding with default on credit is a good one. For one thing, the credit score depends on history. Therefore, past behavior is a factor in the score. With driving, past history can never predict what will happen the next time one drives, because there are too many uncontrollable variables.
There must be a way to devise a formula that says, "if x >y, and z
Sorry, but if we're to be judged and our capabilities are to be determined by these numbers, then they must be arrived at by the most specific and sophisticated formulas possible. I don't buy the idea that we should just accept this ridiculous across-the-board way of arriving at our evaluations.





Are you saying that if you were an insurance company, and you had a 17 year old with 5 accidents on his record, you would charge him the same as a 55 year old with a spotless record spanning 40 years? If what you say about past driving history not being predictive of the future, then the insurance and actuarial industries are a total sham. But... that's a whole other discussion.

I don't disagree with your opinion that these numbers should be derived as accurately as possible. But no matter what formula you throw at it, it's still a formula, and there are going to be people who, when you take the time to consider the subjectivity of their situation, certainly don't fit the formula.

For all we know, they've already done the research that shows, however counterintuitive that it may sound, that it makes no difference (or a small enough difference to be statistically insignificant) how much the amount of the collection was; simply the fact that the collection exists might be a much more reliable indicator of future probability. It might not make total sense, but they don't set rates based on what seems to make sense in our head... they set them based on what the numbers of millions of previous similar situations say is likely to happen.

What you suggest is certainly a desirable concept, but for all we know they've already taken what you suggest into consideration. For all we know they haven't, too... it's impossible to say.

Message Edited by Nuggy on 04-08-2007 10:19 PM
Member
minonda
Posts: 20
Registered: ‎04-08-2007
0

driving history vs credit history

This discussion has now reached the circular phase where I am maintaining one point of view while others are asserting its opposite. Nevertheless, I would like to comment on your question about whether I think a young inexperienced driver with a poor driving history should be charged the same insurance rates as an older more experienced driver with a perfect driving record.
 
I think we are mixing apples and oranges here. Your first analogy compared driving with credit, and you used the example of getting a speeding ticket, saying that you get points for it no matter how perfect your driving record is. You used that example to justify the FICO practice of penalizing anyone for having a collections item on their record with the same degree of severity.
 
Your second analogy seems to be saying the opposite, that the penalty (i.e., the cost of insurance) should fit the history. This is exactly what I am saying. Let the punishment fit the crime.
 
No sensible person would assert that someone whose record of purchasing and paying has earned a score of 762 over a period of decades is suddenly going bad because a minuscule amount of money was allegedly not paid on time. If anything, an anomaly like that would almost have to indicate an oversight, not deliberate neglect, given the credit history. Not only that, but if this offense is in collections, then it is clearly old, therefore cannot be said to represent the debtor's current behavior nor be an indicator of the debtor's current financial situation.
 
That being said, I submit to those of you who believe that the FICO method of determining our worth is valid. DIscussion over. Now I have to turn my attention to getting this thing off my credit report.
Moderator Emeritus
Brammy
Posts: 5,436
Registered: ‎03-10-2007
0

Okay let me chime back inhere.  A collection isn't just a...

Okay let me chime back inhere.  A collection isn't just a miss.  It is an indication that a debt was completely defaulted on.  You asked for answers and that unfortunately is the way the scoring mosel works.  There are no whys or what ifs involved.  Just a computer crunchig out mubers based on past credit performances in a large group of borrowers.  If someone in yuor score range defaults on a dbt, it is seen as a HUGE red flag that more are likely to come.
 
You stated this was paid, it shoudln't be a big issues to get it corrected as long as you have proof of payment.
Member
minonda
Posts: 20
Registered: ‎04-08-2007
0

Columbia House

I found a forum with multiple posts about Columbia House making a practice of reporting collections for people who didn't know they owed Columbia House money.
 
 
This is a great example of why these "negatives" deserve to be treated a little more carefully than simply by lopping points off a person's score. There are countless people out there whose credit record has been besmirched by this company. Why do we bear the brunt of it when it's the company that's at fault?

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