topic Re: Tradelines: Charge Off vs Collection in Understanding FICO® Scoring

Tradelines: Charge Off vs Collection

BMW_328i — Mon, 25 Jan 2016 00:10:20 GMT

(((Moderators, please dont move my topic- it's relating to FICO scoring)))

Hello,

I'm in the process of rebuilding my credit. Here's a snapshot of my situation:

Five collection accounts (totaling ~$1,900)
One repossession (two years old- ~$12K)
One charged off revolving account with CC. (~$200)

EQ-504

TU-496

EX-510

Will I see a significant bump in my FICO score? I plan to payoff the CC and open a secured card. Should I also pay the collections? I would assume that that one CC is at 100% utilization- so paying it off will be of good. Is it unreasonable to estimate a 100 point upward swing?

Thanks in advance!

Re: Tradelines: Charge Off vs Collection

RobertEG — Mon, 25 Jan 2016 00:02:00 GMT

Payment of delinquent debt, be it to a creditor or debt collector, does not negate the fact that any reported derogs occured, and thus does not lead to score improvment.

The basic process is to offer payment to the creditor or debt collector on the condition that they delete their negative reporting.

If they accept, then you get the sought score imrovement.

Re: Tradelines: Charge Off vs Collection

Anonymous — Mon, 25 Jan 2016 00:30:39 GMT

First of all, good for you for being proactive with this!

BMW_328i wrote:
Will I see a significant bump in my FICO score? I plan to payoff the CC and open a secured card.

What would you consider significant? There's a lot of other stuff dragging down the score. But paying off the CC is a start! Even if you don't see a huge jump in score, it's still a move in the right direction.

@BMW_328i wrote:
Should I also pay the collections?

If you have the means, then yes. I know there are scenerios where some would counsel against it (and there's not enough info here to tell whether you're in one of those scenerios). But generally speaking, paying your creditors (assuming you have the means to do so) is the path to healthy credit.

Re: Tradelines: Charge Off vs Collection

BMW_328i — Mon, 25 Jan 2016 00:55:24 GMT

In the short term, I'm will be purchasing a used car & didn't want the be within the sub-prime teir. Given that, I want to increase my score by at leat 100 points within 90 days. I had an old card with a small balance, however, it's currently showing "charged off" and isn't in collections. So I will pay that off immediatly. The score simulator estimates, on average, a 60 point jump. If I also factor in my new credit card, hopefully that will bring me at least 570+. Lastly, when my new card reports I'm hoping that jump will bridge the gap between high 500's to low 600's.

in the long term, I plan on paying all collection accounts per the requirements of most lenders. I'm glad I found this site as it has great tools for taking control of my fiscal responsibilites.

Thanks.

Re: Tradelines: Charge Off vs Collection

BMW_328i — Mon, 25 Jan 2016 01:02:53 GMT

Your statement is false in reference to my specific question. If you are talking collections, you're right. It's my understanding that paying them off has zero benefits. I was hoping there may be a light increase to my score if I did pay them off.

This question at hand is does a payment of a charge off account along with opening a new CC equal a significant increase for a person in my situation.

Thanks for your input.

Re: Tradelines: Charge Off vs Collection

BMW_328i — Tue, 26 Jan 2016 04:55:04 GMT

I got a collection deleted via the dispute process. I see that myFICO doesn't reflect that- is there a lag between Fair Issac & the CB?

Re: Tradelines: Charge Off vs Collection

iv — Tue, 26 Jan 2016 13:00:53 GMT

@BMW_328i wrote:
I got a collection deleted via the dispute process. I see that myFICO doesn't reflect that- is there a lag between Fair Issac & the CB?

Deletions aren't a trigger in the monitoring to update report/score...

You'll need to wait for another event (balance change, etc...) to cause a trigger, then the score will also update to reflect the deletion.

Re: Tradelines: Charge Off vs Collection

BMW_328i — Wed, 03 Feb 2016 21:54:59 GMT

Paid my charged off and my deposit for Capital one. Once CAP1 reports I will do a deposit for a BOA card.

So I think I should easily see 100 point bump for the following events:

1. Paid charged off not in collections

2. Opened two credit cards

3. Collections accounts deleted (at least one)

Is there anything else I could do for my unpaid colllections besides a PFD/GW? I tried to call the EO at CAP1 to no avail- they transferred me to the Recovery Department. Also, I do have 1 paid collection that is due to drop in October- would the CA be more willing to delete since it's almost seven years?

Lastly, in case your curious, as my username states, I have my eyes on a used 328i (~$20K) in the near term. So I want to get the best rate possible (down payment will be ~$5K). I also plan on purchasing a house within the next 1-2 years. I wish I started this process a long time ago...

Thanks in advance.

Re: Tradelines: Charge Off vs Collection

BallBounces — Wed, 03 Feb 2016 22:34:59 GMT

@BMW_328i wrote:
Paid my charged off and my deposit for Capital one. Once CAP1 reports I will do a deposit for a BOA card.

So I think I should easily see 100 point bump for the following events:

1. Paid charged off not in collections
2. Opened two credit cards
3. Collections accounts deleted (at least one)

Is there anything else I could do for my unpaid colllections besides a PFD/GW? I tried to call the EO at CAP1 to no avail- they transferred me to the Recovery Department. Also, I do have 1 paid collection that is due to drop in October- would the CA be more willing to delete since it's almost seven years?

Lastly, in case your curious, as my username states, I have my eyes on a used 328i (~$20K) in the near term. So I want to get the best rate possible (down payment will be ~$5K). I also plan on purchasing a house within the next 1-2 years. I wish I started this process a long time ago...

Thanks in advance.

Regarding the bold, since you did not provide enough information to make a more educated guess, I will just say, "no". The collections accounts deletion will have a significant impact. A paid charge off is still a charge off. What does it look like in terms of missed payments prior to the charge off? Regarding the notion of asking for goodwill on an account that is not paid, well that seems unlikely. Regarding the Collection that is nearing 7 years, you could attempt to ask them to delete it. You could also ask for an early exclusion if and when appropriate.

Re: Tradelines: Charge Off vs Collection

BMW_328i — Thu, 04 Feb 2016 03:18:03 GMT

Thanks for your reply. What information do I need to give?

Re: Tradelines: Charge Off vs Collection

BallBounces — Thu, 04 Feb 2016 04:43:38 GMT

@BMW_328i wrote:
Thanks for your reply. What information do I need to give?

Well, for starters, as I asked, "What does it look like in terms of missed payments prior to the charge off? "

Your scores are quite low. Time, patience and perseverence will be required as you begin the work to imptrove them. The rebuilding forum would be a great spot to do some research.

Re: Tradelines: Charge Off vs Collection

BMW_328i — Thu, 04 Feb 2016 19:04:43 GMT

All bad...not one one time payment. Basically, I opened the card used it and never paid. The myFICO Score Estimates give me a nice increase onthe pending items outlned above. Although the score esimates are not cumulative, I hope it's in the same ballpark.

Re: Tradelines: Charge Off vs Collection

BMW_328i — Tue, 16 Feb 2016 22:53:49 GMT

Has anyone noticed the new score simulators? They are calculating different numbers for paying off CC balances. I don't know why they would add the functionality to add two items but not have them cummulative.

Also, I'm getting mixed messages from myFico and the CBs. They are eaching passing the buck on each other regarding the responsibility of updating the FICO scores. If the CBs have the correct reports they should feed myFICO asap. We shouldn't have to wait until a "trigger" happens. We're paying $30/month for what? Where's the value? The value I did realize was when I received my reports and scores- after that there is no value until quarterly updates. This is where they think people will purchase another report for $50??!!! Not me.

Re: Tradelines: Charge Off vs Collection

Anonymous — Wed, 17 Feb 2016 20:28:37 GMT

Do not pay off the items unless they're getting deleted from your record. They'll be new items since you just paid them and your score will go down. They won't come off for 7 years. See the Rebuidling your Credit section for a post I made about pay for delete. Most collectors will agree to remove the item if you pay them. This DOES NOT WORK once you have paid.

Also, removing 4 or 5 negative items from your report should lead to a massive jump in your score. then you should be able to get secured credit cards or secured loans to have something reporting to start building your credit.

Re: Tradelines: Charge Off vs Collection

BMW_328i — Thu, 25 Feb 2016 18:47:14 GMT

Hello,

I recently paid a charge off from Captial one ($193)- now Equifax is stating that my score dropped 4 points! How in the world is this possible???!!! The "Score Simulator" stated I should see a 60 point increase- what gives??!!!!

Here's a snapshot of my credit:

1. Paid Charge off from 2011 ($193-Capital One)

2. Opened secured card ($500) from Capital One

3. Opened an Auto Loan ($23K) with Capital One

4. Disputed several collection items and anticipate that each CA should have deleted 2 of 5 tradelines.

5. Receives less than 6 inquires related to auto financing within last week.

Zero "New" baddies have added so this makes no sense to me.

Your thoughts?

Thanks in advace!