Paid collection dropped my score 100+ points during mortgage process, anything that can be done?

[Anonymous]

Hello,

When I did my pre-qualification for my mortgage there was nothing derogatory on any of my reports and pre-qualified. Before we went to move ahead with the application my loan officer alerted me that a collection just popped up and dropped my score so far down that it disqualified me and the only way to remedy it is to have it removed or a letter saying it will be removed.

I had a payment arrangement with the original creditor and they never mentioned that it was sent to a collection agency, nor did I receive any notice from the actual collection agency (they said they sent a letter to my old address, but I changed it with the post office so it should have been forwarded) The original collector accepted my payments but never once mentioned it was in collections. It is now paid off the damage is done to my score.

I have pleaded with both the original creditor and the collection agency, and both said it will not be removed. I filed a dispute with TransUnion and it is under investigation being I paid the original creditor who never once informed me a collection agency was involved and that collection agency was giving me a negative report. Had I known it was sent to a collector I would have contacted them immediately, but the original creditor never mentioned it so I believed I was paying the debt to them and only them.

Is there anything I can do? I'm already in contract for the home purchase and cannot believe this $211 debt that is paid has completely destroyed my credit and my mortgage! Please advise. Thanks.

[Anonymous]

Did the OC ever report any late payments?  How late was it?  Usually things that go to collections are 150+ days late, but I would think you'd have an account reported from the OC with late payments.  I would continue to hammer away trying to get that collection removed.  You'll hear a lot of "no" answers, but the only way to get a "yes" is to keep trying. 

[Anonymous]

No, the OC never reported anything to my credit report. I found out now that they sent it to the collection agency 45 days after payment wasn't received. It's a utility company for gas and electric, by the way. I moved from where my account was in August, shut off the service and updated my address with them and the post office. I didn't receive anything from them, so the end of September I called them to find out about the bill, which was $400 and something, made a payment arrangement with them to pay half now and the rest in 30 days, but they had already placed it in collections and did not inform me. So, I did a mortgage pre-qual in the beginning of November and nothing was on there. Then, last week when we moved forward with the application they said the collection was reported on November 10th and dropped my score enough to disqualify me.

If I was aware of the collection agency and what had occurred, none of this would be surprising to me and I would understand what happened, but because the OC was taking my payments to settle the bill and did not mention that a collection agency was involved, I am shocked and frustrated. The collection agency is the one reporting to my credit, and while it has a $0 balance, I had no idea who I was actually paying when the OC took my payment. I thought I was paying them, which is why I'm wondering if there's anything I could do being I paid the OC directly and was never made aware of the collection agency until it was too late.

I filed a dispute with Trans Union, and so far today they updated Experian, but just changed the balance to $0 and that actually dropped my score 2 more points! Considering I never paid the collection agency or dealt with them until it was too late, I find it extremely unfair that they are the ones reporting the debt unbeknownst to me. I have made 25 calls between the OC, collector, and credit bureaus in the past few days, all with slightly different versions of the same response: No, it won't be removed. One person at the collections told me the OC took them off the account and they have no part of it now, but follow up calls did not agree with that. So, now I'm about to be denied a mortgage for a $211 collection from a collector I didn't pay because the OC didn't feel they should mention that when they accepted my payment.

Thank you for your response, I appreciate it, BrutalBodyShots.

[Anonymous]

I'd continue hammering away, but go with letters and/or emails (written) as opposed to phone calls.  Do a search for as many addresses as you can find, including the CEO of your target organizations.  Any addresses will do.  I suggest using the Saturation Technique, which you can read about here: 

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/The-Saturation-Technique-Best-GW-adjustment-o...

Unfortunately, FICO doesn't care about dollar amounts.  Case in point, I had an outstanding $2.93 on an installment loan that I had thought I paid off (way early, BTW).  I didn't know the $2.93 existed until it was 90+ days late and was already on my credit report.  That 90 day late crushed my scores and made it extremely difficult to obtain CCs for a while, forcing me to use an entry-level Capital One Platinum card as my only CC for about a year.  All over $2.93.  Crazy.  Using the Saturation Technique, I was finally able to get to the lender (Wells Fargo) and have them remove the negative information.  It took about a year.  I know that doesn't sound like great news, especially considering you are on the verge of a mortgage, but WF is historically known as an extremely difficult lender to obtain GW from.  You may have better luck with your lenders... just don't ever stop sending those GW letters.  Eventually you can break them down.

[RobertEG]

A creditor or business can refer a debt to a debt collector at any time after it has become delinquent.

They are not required to provide you notice of their referral.

Your account agreement and billing statements constitute "notice" of when payments are due, and thus constitute verification of their asserted debt.  They are not required to separately provide notice of delinquency prior to referral for collection assistance.

A debt collector is not required to send any notice to a consumer until they begin collection activities.

The statutory requirment (FDCOA 809(a)) is that they must send dunning notice aftre they have initiated a communication with the consumer.

A debt collector can report their collection at any time after they receive collection authority.  There is no requirement that they first send any notice to the consumer.

Getting the collection removed requires obtaining a good-will deletion by the debt collector.

CRA policy instructs debt collectors not to delete based on payment of the debt that was under collection, so it is usually difficult to obtain a PFD or good-will deletion.