topic Re: Will paying off CO / collections increase score? in Rebuilding Your Credit

Will paying off CO / collections increase score?

nmk94 — Sat, 11 Apr 2020 15:43:46 GMT

A bizarrely newb question for someone who's been trying to rebuild credit for a long time, but I realize I'm not clear on this.

If I pay off a charge off or a collection (in my case, a charge off that became a collection), will that increase my score?

I realize it won't take it off my report. But if it reports as "PAID", will my score go up?

Relatedly, will a potential new creditor look at it as good if it's paid? I didn't think I'd have to do this, but it looks like due to a work-related move we have to sell our house and find a new one, so I'll need to line up mortgage financing.

Re: Will paying off CO / collections increase score?

egghead88 — Sat, 11 Apr 2020 16:02:26 GMT

It depends.. if it's been updating monthly, it likely to give your score a boost. If it hasn't been updating it will drop your score. I have experience both. You mention that you will be looking for a mortgage soon. Most mortgage UW will require you settle unpaid collections and chargeoff on your CR.

Re: Will paying off CO / collections increase score?

chiefone4u — Sat, 11 Apr 2020 16:05:55 GMT

@nmk94 wrote:
A bizarrely newb question for someone who's been trying to rebuild credit for a long time, but I realize I'm not clear on this.

If I pay off a charge off or a collection (in my case, a charge off that became a collection), will that increase my score?

I realize it won't take it off my report. But if it reports as "PAID", will my score go up?

Relatedly, will a potential new creditor look at it as good if it's paid? I didn't think I'd have to do this, but it looks like due to a work-related move we have to sell our house and find a new one, so I'll need to line up mortgage financing.

A change in reporting from charged off to Paid in Full only matter's or counts in manual underwriting; computer ignores it.

If you can negotiate a pay for delete you'll see a good bump in score (65 points for one of mine YMMV).

Even if they wont delete, your score will begin to improve if they've been updating monthly; as the reporting $0 will be it's final update and the time since most recent delinquency will begin to age.

You may also get an increase on mortgage scores if it has been reporting as a credit card over the limit (by paying it off).

Best of luck going forward!

Re: Will paying off CO / collections increase score?

Red1Blue — Sat, 11 Apr 2020 16:42:33 GMT

@nmk94 wrote:
If I pay off a charge off or a collection (in my case, a charge off that became a collection), will that increase my score?
I realize it won't take it off my report. But if it reports as "PAID", will my score go up?

What is the name of the collection agency you are working with ? Some collection agencies do delete after you pay them in full or make a settlement. If you share the name of the collection agency we can give you idea.

Re: Will paying off CO / collections increase score?

FireMedic1 — Sat, 11 Apr 2020 18:34:44 GMT

When you pay a charge off if the OC is reporting balance. Yes. A charge off is considered a maxed out CC. And it hurts your util %'s. So yes a score bump. Then the CA has nothing to collect any longer. If the OC has a $0 balance but lists it as a charge off. They sold it to the collection agency and you PIF then no score change. Two separate roads. But yes paid in full (PIF) look a whole lot better than owedf or settled for less.

Re: Will paying off CO / collections increase score?

nmk94 — Sat, 11 Apr 2020 18:34:02 GMT

Thanks. I have a few. Midland and Cavalry off the top of my head. I know some of them have changed hands a bunch.

So if something has gone to collection, and I settle, it will still report and also be listed as settled? I have to PIF?

Re: Will paying off CO / collections increase score?

FireMedic1 — Sat, 11 Apr 2020 18:38:51 GMT

Your lucky. Both of those CA's will pay for delete. Settled or paid they will remove them from your reports like they never happened. Nice score bump. If its your only CA's. Its your lucky day. See what they'll take to settle first. Anything less than full payment. It goes poof either way. Good Luck!

Re: Will paying off CO / collections increase score?

nmk94 — Mon, 13 Apr 2020 15:53:00 GMT

How about Radius or Client Services? Looks like those are the other two I have.

Radius is a particular problem, because as far as I can tell they don't own the debt, but they're collecting on behalf of Nordstrom/TD Bank. Can I settle with them and expect it off the report? Or is that up to TD Bank?

Re: Will paying off CO / collections increase score?

FireMedic1 — Mon, 13 Apr 2020 23:52:54 GMT

If TD Bank owns it and the CA is not on your reports. Make an appt to go in branch and pay it. Ask them to recall the CA since they dont own it. Good Luck!

Re: Will paying off CO / collections increase score?

Anonymous — Tue, 14 Apr 2020 00:36:02 GMT

Is Client Services actually reporting to your credit? In my experience they collect on balances but they don't report to the credit bureaus.

Re: Will paying off CO / collections increase score?

nmk94 — Tue, 14 Apr 2020 02:50:18 GMT

@Anonymous wrote:
Is Client Services actually reporting to your credit? In my experience they collect on balances but they don't report to the credit bureaus.

You're right. I checked and Client Services is not reporting to the account. Chase is the original creditor. So I guess that means they still own the debt and CS is just the collections agency?

Re: Will paying off CO / collections increase score?

FireMedic1 — Tue, 14 Apr 2020 07:04:47 GMT

Yep.

Re: Will paying off CO / collections increase score?

FireMedic1 — Tue, 14 Apr 2020 16:09:55 GMT

If owner (OC) of the debt has a balance. Pay them. If there is a $0 balance from the owner (OC). They sold it to a CA and then the CA has to be paid because the owner (OC) got paid for a lessor amount.

Re: Will paying off CO / collections increase score?

kflo01 — Wed, 15 Apr 2020 13:09:08 GMT

This is a great thread I was trying to find a way to figure out who to pay off next that would have the most impact on my credit score. Please let me know what you think I should pay in what order. I will list them in the order I figured made sense.

1) Credit First (Bridgestone) showing a balance of 1022/00 (settled for 500.00) even agreed to mail payment by May 12th. Been reporting monthly. Started Reporting Late Sept 2018. It is showing on all 3 reports.

2) Trident Asset Management OC was Milestone Credit Card. Showing a balance of 682.00 These guys will not move on the price. Lowest they have gone as low as $520.00. It is showing twice on all 3 reports. Once as Trident and once as the OC. Trident started reporting July 2018 the OC started reporting it late Dec 2017.

3) Portfolio Recovery. The balance was 1180.00 but settled on 612.00. I owe roughly 300.00 on it. It is showing on all 3 reports, started reporting Jan 2018

4) First Premier account #1: Balance reporting is 1034.00. They stated they would take 500.00 when I was ready. It is reporting monthly on all 3 reports. It started reporting late Jan 2017

5) First Premier account #2: Balance reporting is 1224.00. They stated they would take 612.00 when I was ready. It is reporting monthly on all 3 reports. It started reporting in late June 2018.

Based on the above paying which ones in which order will have the most impact on my score.

Re: Will paying off CO / collections increase score?

Anonymous — Tue, 05 May 2020 15:36:36 GMT

I payed off a CO discover credit card last month and I dropped 41 points accross the board. It showed as PAID IN FULL was in Charge off. It also reads "New credit card account" which it isn't. I wish I wouldn't of done that!

Re: Will paying off CO / collections increase score?

nmk94 — Tue, 05 May 2020 15:41:31 GMT

@Anonymous wrote:
I payed off a CO discover credit card last month and I dropped 41 points accross the board. It showed as PAID IN FULL was in Charge off. It also reads "New credit card account" which it isn't. I wish I wouldn't of done that!

This is your FICO 8? With all three agencies?

Re: Will paying off CO / collections increase score?

collics — Tue, 05 May 2020 15:47:07 GMT

I've been paying a Barclay charge off the lass 3 months and it has been part of my increases because as others have explained the balance had been reporting all this time and also effecting my utilization

Re: Will paying off CO / collections increase score?

Anonymous — Tue, 05 May 2020 16:35:09 GMT

NMK94,

Yes, it was my FICO 8 from all 3 CB's. Here is the breakdown of points dropped:

EQ -44

EX -41

TU -31

-AK

Re: Will paying off CO / collections increase score?

nmk94 — Tue, 05 May 2020 16:46:21 GMT

@Anonymous wrote:
NMK94,
Yes, it was my FICO 8 from all 3 CB's. Here is the breakdown of points dropped:
EQ -44
EX -41
TU -31

-AK

Hm. I wonder if anyone has insights into this. It may be a temporary hit. Was the CO reporting before as part of your revolving credit? For example, I have two COs. One still factors into my UT, so it reports as an individual account at 100%, but also adds to my total UT. It updates every month. The second account doesn't update (it hasn't since 2015) and FICO isn't using it to calculate UTs.

If you paid this card, it could suddenly show up on your account as a maxed out card, but then hopefully updates at a zero balance and then helps your score. Just speculating here...

Re: Will paying off CO / collections increase score?

Anonymous — Tue, 05 May 2020 17:08:09 GMT

NMK94,

Here is a little bit more information. It was reporting as a CO the last 5 months under revolving credit.

It was a Discover IT secured card for $2500, went to CO and they closed it against the deposit. The monthly reported balance stayed at $606 every single month and 24% utilization even while it was closed. After paying it off through Discover's collection department, here are the things I saw: Please keep in mind that the total points deducted came as several items at times.

EX - (-41) 'A collection listed on your credit report has been updated', Status - Paid charge off.

TX - (-19) Re:'The total balance on all your Bankcard accounts has decreased by $606.

EQ - (-24) Re: 'A collection listed on your credit report has been updated'. Balance: $606 -> $0

Description: Paid charge off secured credit card amount in high credit is original charge off amount.

EQ - (-12) Re: The balance on one of your accounts has decreased by $606.

There are multiple entries on different days which added up to the total points mentioned in the earlier post.

I'm not sure if this was a result of a date reset and showing a new collection status since another allert said 'new card'.

-AK