topic Re: How much do small collections/charge offs hurt after several years? in Rebuilding Your Credit

How much do small collections/charge offs hurt after several years?

chryanna — Thu, 15 Mar 2012 21:45:25 GMT

I have a charge off and a charge off/collection that are both under $250. The first went delinquent in June 2009, the second Feb 2010. I live in NY, so I understand I could get these removed completely if I still live here five years after each first delinquency date (2014-15 respectively) and pay them off (possible, but likely I'll move).

So how long until these stop hurting me if I do nothing? Is it like a simple delinquency that stops having much effect after a few years? They're the only bad marks on my credit, but they're significant. Is it better to pay them if I can't get a PFD, but only a "Paid in full"? Should I wait to do this until it's close to 5 years so that it won't "re-age" my debts in the meantime but I can get them completely deleted after?

Any advice appreciated.

Also, if I leave NY after 5 years but before 7, would the derogatory items return to my credit report?

Re: How much do small collections/charge offs hurt after several years?

LIGHTNIN — Thu, 15 Mar 2012 22:53:46 GMT

Hi and Welcome to the forums,

The amount of money doesn't matter, if it's$5 or 5k.

CA hurt as long as it's on your CR.Not only score wise, but also applying for a CC.

I was denied for a paid CA on my CR, only one CA. Grrr.

CA's hurt in the beginning by 80-100 pts, then hurt less and less as time goes on.

If you can't get the CA to agree with a PFD, then you can try paying it, following up with GW letters.

If you wait until the it's closer to the 5yr mark, you run the risk of them taking you to court.

Also the balance would be higher due to interest.

If you choose to leave NY after the 5yr mark, the derog can not be re-inserted on your CR.

Re: How much do small collections/charge offs hurt after several years?

chryanna — Fri, 16 Mar 2012 01:32:33 GMT

Hi Lightnin,

Thanks so much for the helpful information. I really appreciate it. But are you sure about it not mattering how much the amount is for? I remember reading that there was a recent change where "nickel and dime" collections of under $100 would appear on your credit report, but would not affect your credit score at all. It didn't specify whether there were other differences and gradations above $100. One of my collections is about $100, so it's why I was wondering.

I'm not really worried about their taking me to court for that amount.

Also, is the impact of CAs based on the date of the first derogatory, or the date it hit collections? My derogatory account was in 2009, but it hit collections last month.

Re: How much do small collections/charge offs hurt after several years?

Repo-ed — Thu, 15 Mar 2012 23:56:51 GMT

A collections is a collections in the eye of a lender. Regardless of the amount. I've found they are alot less fond of the low amount collections, but YMMV.

Re: How much do small collections/charge offs hurt after several years?

hotpoint — Fri, 16 Mar 2012 00:13:00 GMT

Hello, The above is correct. Yesterday,while pulling my credit I noticed a collection account for the amount of $44.00 from National Recovery Agency. My score dropped 84 pts. I quickly called the agency, and I almost PFD. Although, I wasn't sure it was my debt from 2009 - I called the OC and they assured me it would be deleted and to my surprise it was deleted within 24 hours. I would strongly suggest PFD w/ some doc's, i.e email, fax, letter. Hot point Equifax 680 3.14.2012 Trans. 684 3.11.2012 Ex - plus 694 3.15.2012

Re: How much do small collections/charge offs hurt after several years?

chryanna — Fri, 16 Mar 2012 00:32:28 GMT

I think collection amounts that are less than $100 do not impact your FICO: http://www.marketwatch.com/story/new-fico-model-may-boost-some-borrowers-scores-2009-08-24

This is a relatively recent change and may not yet be implemented by the different FAKO scores that so many of us use as a proxy for FICO.

Re: How much do small collections/charge offs hurt after several years?

Repo-ed — Fri, 16 Mar 2012 01:48:42 GMT

@chryanna wrote:
I think collection amounts that are less than $100 do not impact your FICO: http://www.marketwatch.com/story/new-fico-model-may-boost-some-borrowers-scores-2009-08-24

This is a relatively recent change and may not yet be implemented by the different FAKO scores that so many of us use as a proxy for FICO.

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Re: How much do small collections/charge offs hurt after several years?

Anonymous — Fri, 16 Mar 2012 01:19:23 GMT

This article appears to have been written in 2009. I'm sure any changes that were being made are in effect already...

Re: How much do small collections/charge offs hurt after several years?

Repo-ed — Fri, 16 Mar 2012 01:22:58 GMT

@Anonymous wrote:
This article appears to have been written in 2009. I'm sure any changes that were being made are in effect already...

Well, they said they are using a FICO08, where as a lot of other lenders are using another model?

That means, here the low amount would have no affect, where as other lenders using another model, would not show the same forgiveness for sub-$100 collections.

Re: How much do small collections/charge offs hurt after several years?

chryanna — Fri, 16 Mar 2012 01:35:46 GMT

I think you're right, Repo. The article states that these tweaks are in effect at all three credit reporting agencies. But it's so hard to get an actual FICO score. The substitutes we often use- well there's no guarantee that they've implemented these changes as well.

Re: How much do small collections/charge offs hurt after several years?

MarineVietVet — Fri, 16 Mar 2012 03:50:25 GMT

@chryanna wrote:
Hi Lightnin,

Thanks so much for the helpful information. I really appreciate it. But are you sure about it not mattering how much the amount is for? I remember reading that there was a recent change where "nickel and dime" collections of under $100 would appear on your credit report, but would not affect your credit score at all. It didn't specify whether there were other differences and gradations above $100. One of my collections is about $100, so it's why I was wondering. This applies to the newest FICO08 models only.

I'm not really worried about their taking me to court for that amount.

Also, is the impact of CAs based on the date of the first derogatory, or the date it hit collections? My derogatory account was in 2009, but it hit collections last month. CA's are scored off the Date of Assignment and no other date applies. Of course that means both the CA's and CRA's have to do their job with the correct coding.

Re: How much do small collections/charge offs hurt after several years?

nicholasyud — Thu, 23 Aug 2012 14:25:16 GMT

@LIGHTNIN wrote:
Hi and Welcome to the forums,

CA's hurt in the beginning by 80-100 pts, then hurt less and less as time goes on.
If you can't get the CA to agree with a PFD, then you can try paying it, following up with GW letters.

Is that true the charge off had less impact on your file after 4 to 5 years ? Can you still hit 700 with charge off ?

Re: How much do small collections/charge offs hurt after several years?

LIGHTNIN — Thu, 23 Aug 2012 22:48:03 GMT

Hi nicholasyud,

Baddies on your CR hurt less and less as they age.

Yes, it's possible to have a CS in the 700's with a CO and/or CA.