topic Old charge-off, New Collection & Score in General Credit Topics

Old charge-off, New Collection & Score

Anonymous — Thu, 20 Jan 2022 22:03:41 GMT

Hi everyone. I recently received a letter than an old charge off from 2019 just went into collections now three years later. My question is - does the new collection hurt my score, or since it's from an old account, does it matter? I'm devastated as I'm in the middle of trying to buy a house and am already pre approved. This could kill me at closing.

Re: Old charge-off, New Collection & Score

thornback — Thu, 20 Jan 2022 22:21:23 GMT

@Anonymous wrote:
Hi everyone. I recently received a letter than an old charge off from 2019 just went into collections now three years later. My question is - does the new collection hurt my score, or since it's from an old account, does it matter? I'm devastated as I'm in the middle of trying to buy a house and am already pre approved. This could kill me at closing.

HI and welcome to the forums.

Yes, unfortunately, a new collection will have a negative impact on your scores (most damaging if it's your only collection account) even through it's from an old account -- and, tbh, 2019 is not all that old. You will basically be penalized (scorewise) for the same account twice.

Do you know which collection agency is handling the debt? You may be able to successfully negotiate a Pay For Delete (PFD), if you have the funds available, and have the collection tradeline removed after payment -- the original charge-off tradeline will, however, remain.

If you have any other outstanding debts reporting, you may want to consider getting them squared away now so to avoid any other surprises during your mortgage process.

Re: Old charge-off, New Collection & Score

Anonymous — Thu, 20 Jan 2022 22:31:44 GMT

This was the only collection on my report as I JUST had an old paid one removed. This is an old Kohls charge-off that is now being handled by Qualia Collection Services. I could easily pay this, and in fact, I called the CA to see if they'd accept my counter settlement offer, to pay it in FULL to have it removed from my credit report. All she told me to do was call Kohls and ask them how it's reported on my credit report. She said they're an agency working for Kohls and that Kohls handles all of the reporting. I was really confused.

When I called Kohls, they couldn't really tell me anything about the agency, and in fact, told me I could pay THEM, the original creditor. Nobody seems to be able to tell me how this is going to be reported and who exactly is reporting it.

This is the only other outstanding debt I have, and I even discussed paying it off beforehand and my reservations about whether or not to do so.

Re: Old charge-off, New Collection & Score

thornback — Thu, 20 Jan 2022 22:45:47 GMT

@Anonymous wrote:
This was the only collection on my report as I JUST had an old paid one removed. This is an old Kohls charge-off that is now being handled by Qualia Collection Services. I could easily pay this, and in fact, I called the CA to see if they'd accept my counter settlement offer, to pay it in FULL to have it removed from my credit report. All she told me to do was call Kohls and ask them how it's reported on my credit report. She said they're an agency working for Kohls and that Kohls handles all of the reporting. I was really confused.

When I called Kohls, they couldn't really tell me anything about the agency, and in fact, told me I could pay THEM, the original creditor. Nobody seems to be able to tell me how this is going to be reported and who exactly is reporting it.

This is the only other outstanding debt I have, and I even discussed paying it off beforehand and my reservations about whether or not to do so.

Ok.... so that sounds super wierd. The CA is responsible for reporting of the collection tradeline and Kohls is responsible for the reporting of their own, original tradeline. So Kohl's doesn't acknowledge that this Qualia CA (never ever heard of them) has collection authority?

If Kohl's is telling you that you can pay them, I'd take that to mean they still own the debt and only assigned collection authority to an outside company - so they can accept payment directly and revoke collection authority from whichever agency to whom they assigned collection efforts. Once a CA no longer has collection authority, they have to remove their tradeline from your reports.

I'd call Kohl's back and try to dig a bit deeper into whether or not they assigned collection authority to these Qualia people and go from there. Do not pay Qualia directly -- that would result in them just updating their collection tradeline to 'Paid' which is not what you want -- you want the tradeline removed. Any payments you make should be to Kohls so long as they still retain ownership of the debt.

Re: Old charge-off, New Collection & Score

Anonymous — Thu, 20 Jan 2022 23:08:09 GMT

Ok! After a little back and forth between Qualia and Kohls, I think I have it figured out (along with help from your post).

I talked to someone else at Qualia who described their agency as a "partner" with Kohls. They said I could either pay them or Kohls. So I called Kohls back, talked to someone else, and they did verify that Qualia collects on their behalf, but that I can still pay Kohls. Then Kohls will send a letter to Qualia letting them know I've paid the debt in full and to cease collecting. From what you've said previously, this does sound like a situation where Kohls gave Qualia authority to collect on a debt, but they don't actually OWN that debt, Kohls still does. So in this scenario, with me paying the original creditor and Qualia no longer having collection authority, it should be removed from my report. However, it still isn't showing on my report yet. The letter was just dated 1/10. I wonder if it will EVER show now.

Re: Old charge-off, New Collection & Score

thornback — Thu, 20 Jan 2022 23:26:55 GMT

@Anonymous wrote:
Ok! After a little back and forth between Qualia and Kohls, I think I have it figured out (along with help from your post).

I talked to someone else at Qualia who described their agency as a "partner" with Kohls. They said I could either pay them or Kohls. So I called Kohls back, talked to someone else, and they did verify that Qualia collects on their behalf, but that I can still pay Kohls. Then Kohls will send a letter to Qualia letting them know I've paid the debt in full and to cease collecting. From what you've said previously, this does sound like a situation where Kohls gave Qualia authority to collect on a debt, but they don't actually OWN that debt, Kohls still does. So in this scenario, with me paying the original creditor and Qualia no longer having collection authority, it should be removed from my report. However, it still isn't showing on my report yet. The letter was just dated 1/10. I wonder if it will EVER show now.

Correct - it may never show up. Some CAs that are only assigned debt collection authority never report their own tradeline, they simply try to obtain payment. So you may have lucked out (or just caught it early enough to take preventative action). Pay Kohls and be diligent afterwards -- get a confirmation code/number of payment and then call Qualia back and provide that info to them and ask that they notate your account so the info is there while they await further confirmation of payment from Kohl's. Then, once you receive the payment confirmation letter, fax or email it over to Qualia for their records and ask that they close out your account and send you written confirmation that the account is now settled and no further collection efforts will be made. Then continue to monitor your credit reports for the next 30 days just to ensure nothing pops up. The only thing that should happen on your reports is Kohl's updating their tradeline to reflect Paid and a $0 balance.

Best of luck with your new home purchase!!

Re: Old charge-off, New Collection & Score

Anonymous — Thu, 20 Jan 2022 23:52:08 GMT

Thanks so much! Your advice has been very helpful!

Re: Old charge-off, New Collection & Score

thornback — Fri, 21 Jan 2022 00:10:37 GMT

@Anonymous wrote:
Thanks so much! Your advice has been very helpful!

You're very welcome - glad I could be of use.

Re: Old charge-off, New Collection & Score

Anonymous — Fri, 21 Jan 2022 03:33:00 GMT

It turns out I do have one more question, actually. So I've become concerned that since this CO hadn't reported in 3 years, I'm going to see a serious tank in my score now due to the updated reporting date. My question is: will the drop in utilization be enough to save me from a severe point decrease? That account was at 127% utilization due to all of the fees. I'm just hoping that might offset the drop from the reporting date being updated. I'm so worried it's ruined my chance of closing a mortgage.

Re: Old charge-off, New Collection & Score

thornback — Fri, 21 Jan 2022 04:05:11 GMT

@Anonymous wrote:
It turns out I do have one more question, actually. So I've become concerned that since this CO hadn't reported in 3 years, I'm going to see a serious tank in my score now due to the updated reporting date. My question is: will the drop in utilization be enough to save me from a severe point decrease? That account was at 127% utilization due to all of the fees. I'm just hoping that might offset the drop from the reporting date being updated. I'm so worried it's ruined my chance of closing a mortgage.

Yes, it's possible you'll lose points for the update after three years of dormancy - but the points gained from reduced utilization is likely to offset the loss so you either end up with a small point gain or breaking just about even. Given the current 127% util, I don't believe it will wreck your scores, but a small dip is a possibility.

The alternative would be leaving it alone and keeping your fingers crossed that this CA has no intentions of reporting their own tradeline -- and a collection account is guaranteed to tank your scores.

When is your estimated closing date?

Re: Old charge-off, New Collection & Score

Anonymous — Fri, 21 Jan 2022 04:31:55 GMT

I don't actually have a purchase agreement yet, but it's likely I'll be putting an offer on a house tomorrow. Assuming my offer is accepted, it would be at least a month before closing, I'm sure. If my offer is rejected, then it's back to the drawing board without any real estimate of closing.

I did already pay the debt with the OC earlier this evening, so it's already set in motion. I know it'll be good in the long run, but how it's going to affect me currently has got me worried.

But to clarify, if the CO is reporting a utilization rate on the account, then that's safe to assume it's being factored into my score, correct? I'm really hoping that paying it off will reduce that utilization and at least offset the drop I'm about to experience from the updated reporting date.

Re: Old charge-off, New Collection & Score

thornback — Fri, 21 Jan 2022 05:02:17 GMT

Yes - it is absolutely factored into your utilization - so bringing it to zero is worth a good amount of points. I think, based on my own experience and data points from others in this forum, you'll come out of this just fine.

Also keep in mind that it could take several weeks - up to 60 days ' for Kohls to even update the account.

Re: Old charge-off, New Collection & Score

Anonymous — Sat, 22 Jan 2022 02:13:06 GMT

Thanks! This eases my mind a little.