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Small-Balance Collections Accounts

Frequent Contributor

Re: Small-Balance Collections Accounts


BulldogX wrote:

Thanks for your reply. I actually did contact myFICO support and am waiting for their answer.

 

The quote I cited from the myFICO website doesn't distinguish who is doing the collection or what type of collection it is. It's very simple and straightforward: Less than $100, not counted. I was afraid there would be a 'catch.'


Let us know your findings. 


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Current Score: EQ 838, TU 850, EX 847
Goal Score: EQ 750, TU 750, EX 780


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Valued Member

Re: Small-Balance Collections Accounts

I may be in luck.

 

Writing to myFICO was a good move. The reply I received stated that the $92 item on my credit report is presented as a "charge-off" rather than a collection. FICO's policy for less than $100 applies only to collections.

 

I don't know what the technical distinction is between a charge-off and a collection - that's where I'll need your help. These are the facts: The $92 amount, which I acknowledge not initially paying, was eventually sent to a collection agency and then it appeared on my credit report. When I saw the item on my credit report, I contacted Verizon Wireless - not the collection agency - and paid the full amount plus a collection fee of $11 ($103 in total) to Verizon Wireless.

 

The way Verizon Wireless explained it to me at the time, this item was called a "paid collection." The way I understand a "charge-off" - if I understand correctly - is that it is an amount that was not collected. In other words, a loss. But I did pay this item, in full.

 

So ... is my $92 item a collection or is it a charge-off? If it's a charge-off, that's where it ends. If it's a collection I can easily provide proof of payment.

Frequent Contributor

Re: Small-Balance Collections Accounts


BulldogX wrote:

I may be in luck.

 

Writing to myFICO was a good move. The reply I received stated that the $92 item on my credit report is presented as a "charge-off" rather than a collection. FICO's policy for less than $100 applies only to collections.

 

I don't know what the technical distinction is between a charge-off and a collection - that's where I'll need your help. These are the facts: The $92 amount, which I acknowledge not initially paying, was eventually sent to a collection agency and then it appeared on my credit report. When I saw the item on my credit report, I contacted Verizon Wireless - not the collection agency - and paid the full amount plus a collection fee of $11 ($103 in total) to Verizon Wireless.

 

The way Verizon Wireless explained it to me at the time, this item was called a "paid collection." The way I understand a "charge-off" - if I understand correctly - is that it is an amount that was not collected. In other words, a loss. But I did pay this item, in full.

 

So ... is my $92 item a collection or is it a charge-off? If it's a charge-off, that's where it ends. If it's a collection I can easily provide proof of payment.


Hi BulldogX,

 

I did a quick search here on MyFICO, and came across a post by RobertEG....:

 

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Charged-Off-vs-Collection/m-p/1088168#M156601

 

I think that what has happened in your situation that Verizon did not notify the collection agency that the debt was paid.  So I think the way it showing on your credit report as a charge off is not correct, but rather it is a collection that has been paid.  Now the grey area is that fee that they tacked on which would bring the amount over $100.  I would probably go back to Verizon and have them contact the colleciton agency to have it removed and/or reclassified as a collection.

 

RobertEG is certainly an subject matter expert on this.  Perhaps he will see this thread and chime in.  Any others, feel free to chime in as well.


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Valued Member

Re: Small-Balance Collections Accounts

Thanks - that is really encouraging.

 

I can write to Verizon Wireless directly and ask them to make the correction (if jusitified), or I can initiate a dispute of my TU credit report in which case I believe TU will contact Verizon Wireless. Which course of action is preferable? I'm not sure which organization makes the determination of whether an item is a collection or a charge off.

Valued Member

Re: Small-Balance Collections Accounts

After some back and forth with myFICO - who have been really helpful - I've decided to file a dispute on my credit report, since this provides a formal chain of communication. I'm gathering the documents to establish the facts and then I'll file.

Frequent Contributor

Re: Small-Balance Collections Accounts


BulldogX wrote:

After some back and forth with myFICO - who have been really helpful - I've decided to file a dispute on my credit report, since this provides a formal chain of communication. I'm gathering the documents to establish the facts and then I'll file.


Hi BulldogX,

 

Please us know the result of your dispute.  Wishing you best with this. 


Starting Score: EQ 593, TU 600, EX 612
Current Score: EQ 838, TU 850, EX 847
Goal Score: EQ 750, TU 750, EX 780


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Valued Member

Re: Small-Balance Collections Accounts

Unfortunately, my story has an unhappy ending. As it turns out, the myFICO support person I was writing to didn't really know what they were talking about.

 

That person told me that the $92 deragatory account on my TU report was being reported as a charge-off, when I knew for a fact that it was a paid collection. The support person told me to dispute the item. TU calls this an 'opening an investigation.'

 

As I was preparing the investigation I noticed that on my copy of the TU report, the item clearly stated "paid collection." When I brought this to the support person's attention, all they could say was yes - it is a paid a collection after all.

 

So I'm back to square one: If this $92 account is a paid collection, and if FICO's policy is to exclude collections less than $100 from the computation of a FICO score ... why is this $92 account described as a negative "score factor" for my FICO score? In fact, it's the only negative score factor on my TU report. The support person has no answer.

 

Now I'm lost. Should I try again with myFICO support and hope to get someone who really knows what's going on? Is there a better place to ask why a $92 paid collection is included in the computation of my FICO score in apparent contradiction of FICO's own stated policy?

Valued Member

Re: Small-Balance Collections Accounts

Here's the latest progress on my case. Get ready: It's becoming really absurd.

 

I finally found someone at myFICO who was willing to explain FICO's policy. A "collection" for the purposes of the less-than-$100 policy is an account that was sent to a third-party collection agency. If the account was instead sent to an in-house collection agency - for example, Verizon Wireless' own internal collection department - that is not considered to be a collection for the purposes of their policy

 
Between you and me, that sounds like bulls**t. But let's go on.
 
In fact, my account was sent to a third-party collection agency, but when I got their notice I called Verizon Wireless instead and paid them directly. I paid my outstanding debt of $92 plus a collection fee that was probably sent to the collection agency.
 
So now what I must do is contact Verizon Wireless and ask them to report that my account was sent to a collection agency, if that's even possible.
 
Here's what I think about it: FICO has this policy that no public-facing person really understands or knows how to defend, so instead they concoct an unlikely explanation conveniently built around my individual circumstances. But if I can regain 90 points of my FICO score by playing their silly game, I'll do it.
Valued Member

SOLVED: Small-Balance Collections Accounts

Solved at last.

 

I found someone else at myFICO and this time I got an explanation I can believe in.

 

The story I was given about an in-house collection agency vs. a third-party collection agency was malarkey (as the Vice President likes to say.) Instead, here's the real story:
FICO applied its policy correctly. The $92 did not affect my score. What affected my score was the late payment of same. Had the amount in question been $100 or more, my FICO score would have been affected even more.

 

The drop in my FICO score from the late payment was pretty big because I don't have that many credit accounts to begin with. So to build up my FICO score I'll need one or two more credit accounts. That, and the passage of time and responsible credit management.

Frequent Contributor

Re: SOLVED: Small-Balance Collections Accounts


BulldogX wrote:

Solved at last.

 

I found someone else at myFICO and this time I got an explanation I can believe in.

 

The story I was given about an in-house collection agency vs. a third-party collection agency was malarkey (as the Vice President likes to say.) Instead, here's the real story:
FICO applied its policy correctly. The $92 did not affect my score. What affected my score was the late payment of same. Had the amount in question been $100 or more, my FICO score would have been affected even more.

 

The drop in my FICO score from the late payment was pretty big because I don't have that many credit accounts to begin with. So to build up my FICO score I'll need one or two more credit accounts. That, and the passage of time and responsible credit management.


Hello BulldogX,

 

Thanks for coming back here and posting your findings.  This will help others who might be faced with a similar situation.  I agree that since your file is a little thin, to add on a couple more accounts, and allow for the passage of time as well as sound financial credit management! ;-)


Starting Score: EQ 593, TU 600, EX 612
Current Score: EQ 838, TU 850, EX 847
Goal Score: EQ 750, TU 750, EX 780


Take the myFICO Fitness Challenge