topic Re: Top reasons "Hurting your score" in General Credit Topics

Top reasons "Hurting your score"

Anonymous — Thu, 24 Feb 2011 14:47:33 GMT

The following three reasons are listed as the top three things hurging my score in my TU and EQ reports:

Collection - was paid a month after it appeared on my reports 4/09

Recent Collection 1 year 10 months

High Utility 92%

I plan on paying off a $11k due on my car loan by end of May as well as $6k of revolving debt. I do hope this will bring my scores up, but by how much? I plan to shop for a mortgage late summer. How much of the first two items are really hurting my score?

Current score is 648 (due to the recent high usage of my cc's)

Thanks

Re: Top reasons "Hurting your score"

Anonymous — Thu, 24 Feb 2011 16:18:58 GMT

Curious as to why you're going to pay 11k on your car loan. why not save that money for a down payment? If 6k is all that is left on your credit cards then good job but if you have more revolving credit you should probably pay those off before the car loan. Paying off your car won't really help you as much except to reduce the amount owed on installment loans.

Re: Top reasons "Hurting your score"

MarineVietVet — Thu, 24 Feb 2011 16:29:21 GMT

@Gypsystravels wrote:
The following three reasons are listed as the top three things hurging my score in my TU and EQ reports:

Collection - was paid a month after it appeared on my reports 4/09
Recent Collection 1 year 10 months
High Utility 92%

I plan on paying off a $11k due on my car loan by end of May as well as $6k of revolving debt. I do hope this will bring my scores up, but by how much? I plan to shop for a mortgage late summer. How much of the first two items are really hurting my score?

Current score is 648 (due to the recent high usage of my cc's)

Thanks

Those are pretty recent collections and IMO are still hurting you quite a bit. Paying that one collection will look good to future lenders but a paid collection hurts just as much as an unpaid one. You could try a GW (Good Will) approach to getting it removed early. Is the other collection still unpaid? Have you ever been contacted by a CA (Collection Agency) about this? Collections can report for up to 7.5 years from the DoFD (Date of First Delinquency) on the OC account that led to the collection.

Is that $11,000 for the car loan to pay it off completely?

If you don't mind could you break down in more detail your CC debt? List balances, credit limits, and APR's for each account? That would give readers a better idea how to approach suggestions for using your funds to pay down/payoff that CC debt.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Re: Top reasons "Hurting your score"

Anonymous — Thu, 24 Feb 2011 20:16:43 GMT

Hi,

The only collection I have on my reports (EQ and TU) is the paid collection, which I paid off a little less than 2 years ago and is due to fall off next year.

CapOne $750 - $600 (no apr until 6/11) -

Public $600 - $250 (21%)

Kay $6,000 - $5,300 (24%)

My credit history is 11.7 years and my AAoA is 5 years. Other than my car loan, I don't have any other revolving cards. The 11k is the balance due on my car loan and it is killing me with a 25% insterest rate (did this loan when my scores where horrible) so it is why I want to pay that off.

As for the "recent collection" and the "collection" they are one and the same, they are both listed as the first two things hurting my score. I tried to gw, but got nowhere. I gave that up.

The score stimulator says that if I pay my revolving off in 3 months my score would improve to about 678-718, which is a much better number than the one I have now.

Any advice on how to handle this would be appreciated

Re: Top reasons "Hurting your score"

MarineVietVet — Thu, 24 Feb 2011 20:41:12 GMT

@Gypsystravels wrote:
Hi,

The only collection I have on my reports (EQ and TU) is the paid collection, which I paid off a little less than 2 years ago and is due to fall off next year.

CapOne $750 - $600 (no apr until 6/11) -
Public $600 - $250 (21%)
Kay $6,000 - $5,300 (24%)

My credit history is 11.7 years and my AAoA is 5 years. Other than my car loan, I don't have any other revolving cards. The 11k is the balance due on my car loan and it is killing me with a 25% insterest rate (did this loan when my scores where horrible) so it is why I want to pay that off. I can't blame you for that. If you have the funds and can pay this and still keep an emergency fund then I say pay it off and be done with it.

As for the "recent collection" and the "collection" they are one and the same, they are both listed as the first two things hurting my score. I tried to gw, but got nowhere. I gave that up. Oh ok. I just misundertood. I thought they were 2 separate collections. Well one collection is better than 2.

The score stimulator says that if I pay my revolving off in 3 months my score would improve to about 678-718, which is a much better number than the one I have now. It looks like that other $6,000 will just about pay off your CCC's. My advice on this is the same as the car loan. If you can pay this and still have enough savings left over then I would do it. But you must make sure you have the self discipline not to run those balances back up.
If you pay those off and moving forward try and only have one of those cards report a small (<9% of it's credit limit) balance on it's monthly statement and then pay in full before the due date to avoid interest. On the other cards always try and have them report a zero balance each month on their statements. That doesn't mean you can't use them it just means time your payments during the month so that the desired zero balance is achieved several days before the statements post. This approach seems to work for most people in tweaking their score but you might have to play with the percentages a bit to see what works best for you.

Any advice on how to handle this would be appreciated

Re: Top reasons "Hurting your score"

haulingthescoreup — Thu, 24 Feb 2011 21:38:17 GMT

@Gypsystravels wrote:
Hi,

The only collection I have on my reports (EQ and TU) is the paid collection, which I paid off a little less than 2 years ago and is due to fall off next year.

CapOne $750 - $600 (no apr until 6/11) -
Public $600 - $250 (21%)
Kay $6,000 - $5,300 (24%)

My credit history is 11.7 years and my AAoA is 5 years. Other than my car loan, I don't have any other revolving cards. The 11k is the balance due on my car loan and it is killing me with a 25% insterest rate (did this loan when my scores where horrible) so it is why I want to pay that off.

As for the "recent collection" and the "collection" they are one and the same, they are both listed as the first two things hurting my score. I tried to gw, but got nowhere. I gave that up.

The score stimulator says that if I pay my revolving off in 3 months my score would improve to about 678-718, which is a much better number than the one I have now.

Any advice on how to handle this would be appreciated

Many people don't realize that a paid collection is just as damaging to your FICO score as an unpaid collection.

Yes, lenders would rather see that it was paid, but what makes you risky for future credit (this is what FICO scores try to predict) is that you once had an account that got so far behind that it went to collections in the first place. The fact that you were eventually able to pay it doesn't cancel the fact that it happened in the first place. Again, this is looked at from the perspective of future credit risk, not whether you're an awful person who kicks puppies, etc.

How will the collection fall off next year? Most negatives stay on our reports for 7 years; some longer. Or wait, was this a collection from 6 years ago that you were able to pay off when it showed up? If so, it's reporting the wrong date. But if it really did hit 2 years ago, it will be on your reports for 5 more years, putting you in the serious derogatory score bucket. It's not the end of the world; many people do a great job recovering their credit with collections on their reports.

Are there late payments showing that led to the collection, or was it for something like a cable bill, etc that doesn't have a string of 30-60-90 day lates (like a CC)?

Paying off the CC's will help your scores more than paying off the auto loan. Of course, since it looks like you can pay them off pretty much at the same time, that's a moot point.

The high utilization (not utility, btw) is listed third, meaning it carries less weight than the collection, but it's definitely still hurting, so I think you'll see a decent score rise with that. As I said, paying off the auto loan won't make much difference, except to your wallet, which in the end is the important thing.

I do think that when you have negligible debt reporting (come this May), and your collection goes over 2 years old, you should have pretty decent scores, as long as there are no other negatives whatsoever reporting.

But again, that collection is going to be there for a total of seven years from the date that it happened, which might have been before it was reported, of course.

Re: Top reasons "Hurting your score"

llecs — Sun, 27 Feb 2011 18:25:53 GMT

Split post to form a new thread within Understanding FICO Scoring.