topic Re: Paying on old collection account in Understanding FICO® Scoring

Paying on old collection account

Anonymous — Fri, 31 Jul 2009 22:39:58 GMT

Is it true that if you make a payment on a collection account you have had for some time i.e. 6 years, and you haven't paid on it up until then that this could actually lower your score?

Re: Paying on old collection account

AndySoCal — Fri, 31 Jul 2009 23:54:08 GMT

It is true.

Message Edited by AndySoCal on 07-31-2009 04:54 PM

Re: Paying on old collection account

Anonymous — Sat, 01 Aug 2009 18:35:59 GMT

it happened to me

Re: Paying on old collection account

Anonymous — Sun, 02 Aug 2009 01:57:30 GMT

I wonder why it works this way?

Re: Paying on old collection account

llecs — Sun, 02 Aug 2009 02:14:26 GMT

I've been challenged on this topic, but, IMO, paying a CA can lower your score if you pay without a PFD. One thing we all can agree on is that paying a CA will not help your score.

The mere presence of a CA reporting is the damage. Creditors don't like to see it reporting because it indicates that you had credit troubles in the past. Therefore, when you pay a CA without a PFD it won't increase. It doesn't matter if you owe $0 or $10,000, the damage is equal.

Where we differ is whether or not your score can drop. Payment will always change the reporting date and the DOLA. I'd argue that changing these dates from an older date (esp. true if the CA hasn't updated in a long while) to a newer date. FICO would see this as a newer collection vs. seeing it as an older one. My 2 cents anyway. Some have reported no change after PIF without a PFD and some have reported drops.

Re: Paying on old collection account

Anonymous — Sun, 02 Aug 2009 17:41:38 GMT

Sorry llecs,

I am a rookie, so could you tell me what IMO,PFD and DOLA stand for?

Thanks

Re: Paying on old collection account

Anonymous — Sun, 02 Aug 2009 17:43:51 GMT

Actually i am going to take a guess. DOLA (Date of Last Activity?)

PFD=Something file date?

IMO=Not sure

Re: Paying on old collection account

llecs — Mon, 03 Aug 2009 04:24:52 GMT

lrand wrote:
Actually i am going to take a guess. DOLA (Date of Last Activity?)
PFD=Something file date?
IMO=Not sure

Close....DOLA is Date of Last Activity. This date can be updated with a payment, updated via a dispute, DV letter, etc.

PFD = Pay for Delete.

IMO = In My Opinion.

Common Abbreviations

Re: Paying on old collection account

RobertEG — Mon, 03 Aug 2009 07:32:29 GMT

But how can the update of a DOLA on the consumer part negatively impact FICO? It does not, of course,update DOFD.

Is the impact of old derogs updated in FICO scoring based on a subsequent DOLA payment against the derog?

Re: Paying on old collection account

AndySoCal — Tue, 04 Aug 2009 03:28:14 GMT

It is the account re-reporting and the date reported beiing brought forward in time that causes the problem. It is how FICO is intrepreting the re-reported./updated account that is the problem. I have "heard" that this will be corrected in the new FICO 2008 score model. I am not 100% sure if I am correct or not.

Re: Paying on old collection account

RobertEG — Wed, 05 Aug 2009 03:33:06 GMT

I ahve always assumed that the impact of OC account delinquenies (30, 60, 90+) lates are scored in FICO based on the time elapsed from the delinquency date, and that CA accounts are scored from time elapsed from the DOFD.

Does a DOLA on an account (payments) change how FICO scores the impact of the derog over time?

It most certainly cannot update its drop off date from the CR.

Re: Paying on old collection account

AndySoCal — Fri, 07 Aug 2009 02:25:07 GMT

I am not sure which piece of data that changes that causes the problem. I cannot rember seeing a CA report a DOFD or DOLA to the bureuas. Generally speaking collection agencies report the account twice usually. The first time when the CA gets the account and the second when its paid (in theory).