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is it considered good if an unpaid co gets sold to a collections agency?

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johnpalley
Established Contributor

is it considered good if an unpaid co gets sold to a collections agency?

i just chalenged an unpaid chase charge off from 4 years ago. before i challenged it, it said on my report that i had a $2500 unpaid balance. i checked my report today and now it says purchased by another lender with a balance of 0. in my eyes this should be good right? because my utilization of credit used went down and even if some new collections company posts to my credit report with the $2500 it wont count toward my utilization because its a collections agency, correct? people on these boards told me that balances from credit card companies count toward utilization but if its from a collection agency then it doesnt count. your thoughts please?
Message 1 of 10
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Anonymous
Not applicable

Re: is it considered good if an unpaid co gets sold to a collections agency?

Worst. Another major negative accounts one that will be recent if they place a collection. Smiley Sad I see your point but either way it's bad. You might be able to settle for less with a PFD on the collection account, in turn pay less out of pocket to stop it from going further and 0 out the UTL. Risky. I've never seen anyone intentionally take this approach. If it is something new and it works all the power to you. Usually it would be more advisable to work with the original lender.

Message Edited by ilovepizza on 08-29-2008 12:45 AM
Message 2 of 10
johnpalley
Established Contributor

Re: is it considered good if an unpaid co gets sold to a collections agency?

a few months ago i had a brand new collection agency start reporting on equifax that had a $5000 balance. this new account represented a charge off that happened 4 years ago. i was extremely suprised because when it posted to my report my score didnt change. i thought it was because it was representing an old charge off and equifax still looked at the new collection as a 4 year old account like the charge off. if a new collections account posts to my reports that represents an old dept are you sure it would lower my scores? isnt it all last activity/payment. just because a new collection account gets posted it cant really make my first derog more current. and also how do they distinguish when they delete a new collections account if that account represents a 5 year old dept? could it be deleted in 2 years because by that time it would represent an account thats 7 years old?
Message 3 of 10
Anonymous
Not applicable

Re: is it considered good if an unpaid co gets sold to a collections agency?

Yes it can and if not you can have it removed after 7 years. If you have more collections sometimes it is just one or few that is hurting and more doesn't lower the score anymore. Once 7 years passes from original debt fault even if the CA is just sold to a new company and brand new the debt is still 7 years old and comes off. Sometimes you have to dispute after 7 years to remove them because CAs try not to remove them if possible.
Message 4 of 10
johnpalley
Established Contributor

Re: is it considered good if an unpaid co gets sold to a collections agency?

ilovepizza , so by your own words the new collection agency account wont really do anything worse because its not looked at as new. and since the credit card charge off balance went from 2500 to 0 than most likely in will improve my score because it helps my utilization, correct? am i missing something?
Message 5 of 10
johnpalley
Established Contributor

Re: is it considered good if an unpaid co gets sold to a collections agency?

bump
Message 6 of 10
Anonymous
Not applicable

Re: is it considered good if an unpaid co gets sold to a collections agency?

Depending on how high your UTL was from that debt. If it was 60% of your UTL it might help more than the CA. But a new CA will hit your score. I was just pointing out that if you have many CAs already another might not affect your score as you only get dinged for the first so many. I don't know how many that is. But the more recent things are they will affect your score. A new CA will be more recent even if the debt is old. But you bring up a good point about the UTL.

You can answer this question best. Now that the bal is reported $0 did you get a score increase? Then when the CA shows up (if they do) then you can see how much the score drops. At that point all will be answered. If the UTL was a small amount the CA will probably hurt more, if UTL was a large part of your score drop you might benefit... Assuming the CA reports as fixed debt.
Message 7 of 10
johnpalley
Established Contributor

Re: is it considered good if an unpaid co gets sold to a collections agency?

how does a new ca make a more recent delinquancy if it represents an old dept? it goes by the first delinquancy? this is hard for me to understand. is it possible that before when a new ca posted to my equifax my score didnt change because it wasnt looked at as brand new? are you 100% sure that what your saying is right? this is a very important subject that i want to be clear on.

Message Edited by johnpalley on 08-28-2008 08:13 PM
Message 8 of 10
Anonymous
Not applicable

Re: is it considered good if an unpaid co gets sold to a collections agency?

You are not being dinged for the debt from the CA you are being dinged for a new CA reporting. Each time a CA sells the debt to another CA it reports a "new CA". The debt is a different factor. Think of a CA like any other new account. Just that you have a new CA. The debt can be 6.9 years old or 1 day old. CAs are bad for credit reports. Not only that I think they lower avg age too. I am not an expert on negative data but I know CAs are bad. Someone else feel free to hop in..
Message 9 of 10
johnpalley
Established Contributor

Re: is it considered good if an unpaid co gets sold to a collections agency?

i understand. thanks
Message 10 of 10
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