topic Re: Difference Between 2 collections and 1 collections accounts on Credit Score in Rebuilding Your Credit

Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Tue, 28 Jul 2020 19:30:26 GMT

I am helping my girlfriend repair her credit. Here is her situation:

Item 1:

$750 charged-off credit card from Comenity

Comenity sold this debt to a collections agency. We paid the collections agency and they agreed to a PFD so the collections account is no longer on her credit report but the charge-off remains.

Item 2:

$650 charged-off credit card from Cap1

As best I can tell Cap1 sold this debt to a collections agency because she is receiving collections notices from Portfolio Recovery Associates...The odd thing is I don't see the original charged-off account on her credit

Item 3:

$3000 charged-off CC from Barclays

Both Items 2 and 3 are past the Statute of Limitations.

Here is my key question: Will it make much of a difference if we do a PFD for Item 2? Or will her credit score basically stay the same since she will still have other charge-off and collections accounts (from items 1 and 3) remaining on her credit report?

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

BmoreBull — Tue, 28 Jul 2020 17:22:04 GMT

@Anonymous wrote:
I am helping my girlfriend repair her credit. Here is her situation:

Item 1:
$750 charged-off credit card from Comenity
Comenity sold this debt to a collections agency. We paid the collections agency and they agreed to a PFD so the collections account is no longer on her credit report but the charge-off remains.

Item 2:
$650 charged-off credit card from Cap1
As best I can tell Cap1 sold this debt to a collections agency because she is receiving collections notices from Portfolio Recovery Associates...The odd thing is I don't see the original charged-off account on her credit

Item 3:
$3000 charged-off CC from Barclays

Both Items 2 and 3 are past the Statute of Limitations.

Here is my key question: Will it make much of a difference if we do a PFD for Item 2? Or will her credit score basically stay the same since she will still have other charge-off and collections accounts remaining on her credit report?

If the Comenity charge off is reporting 0 than it is no longer updating regularly and her scores can heal from that one. But if the other collections are still updating monthly, they are further suppressing her scores. Portfolio will PFD. So I would reach out to them and try to see what they will settle for. Don't know if the Barclays account is in collections or still in house. But if it's a charge off, it's affecting her utilization. I got rid of all of my collections. Still have one charge off reporting 0 balance on my record until 2024. So the best I can probably do with my scores is maybe low 700's until it falls off. If the co was still reporting every month and the collections still on my report, I would be probably low 600's at best. So yes she should take care of the other two accounts. Especially if she wants a mortgage any time in the near future. Any underwriter would want to see those cleared up. Good luck.

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

ThetoriParadox — Tue, 28 Jul 2020 19:27:17 GMT

Regarding the Cap 1 account not appearing on the credit report.

I had 3 CO from them and all three disappeared, the collection is still with PRA, but original charge off gone. I consider it a blessing haha.

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Tue, 28 Jul 2020 20:45:23 GMT

keep in mind that the Barclays charge off could pop up any day as a collection as well.. (I assume from your post it hasn't)

If item 2 will PFD today (as I believe some one posted), they will probably PFD in the future as well.

So if it were me i would consider working out a deal with barclays before a collection for them pops up (unless they have a history of not leading to collections, then it's a judgement call i suppose).

Once I knew the Barclays risk was covered, i would hit that last collection for the PFD.

That would leave you with 0 collections on the report, and only the 3 original charge offs.

Other's may have different opinions on this of course.

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Tue, 28 Jul 2020 23:55:26 GMT

Welcome to the forums! Unfortunately, just having an item in collections will hurt your gf's scores. If you can avoid it, try to remove or prevent any additional collection accounts from posting.

1. Unfortunately, I have not heard of sucessful chargeoff removals from Comenity, but you can always try sending a good will letter or two just in case.

2. PRS probably has not posted to their collection account to your gf's credit report or is reporting on a credit report that you have not noticed yet. They pfd so if you can take care of this one, definitely do so.

3. Thankfully this is out of sol so there is no chance of a lawsuit. They can still sell the debt to a collection agency. When was this chargeoff last updated? Banks tend to update chargeoffs monthly which hurts your score until its paid off (And even then it will slowly hurt less over time).

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Wed, 29 Jul 2020 02:32:06 GMT

@Anonymous wrote:
I am helping my girlfriend repair her credit. Here is her situation:

Item 1:
$750 charged-off credit card from Comenity
Comenity sold this debt to a collections agency. We paid the collections agency and they agreed to a PFD so the collections account is no longer on her credit report but the charge-off remains.

Item 2:
$650 charged-off credit card from Cap1
As best I can tell Cap1 sold this debt to a collections agency because she is receiving collections notices from Portfolio Recovery Associates...The odd thing is I don't see the original charged-off account on her credit

Item 3:
$3000 charged-off CC from Barclays

Both Items 2 and 3 are past the Statute of Limitations.

Here is my key question: Will it make much of a difference if we do a PFD for Item 2? Or will her credit score basically stay the same since she will still have other charge-off and collections accounts (from items 1 and 3) remaining on her credit report?

Here is the deal from the scoring perspective. As long as she has a collection, she's in a public record scorecard. Paying a collection offers no benefit, only deleting it.

Once you delete it, she will go to a delinquency scorecard and her score will improve. the chargeoff still has to be dealt with or continue to suppress her score until they are paid, IF they are regularly updating. If they are not regularly updating, then they are not further suppressing her score.

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

OmarGB9 — Wed, 29 Jul 2020 13:03:22 GMT

Yes, in my experience, cap one for some reason deletes their TL once they CO and sell the debt. Good news is PRA will PFD without you having to ask, whether you PIF or settle. So whenever she/you guys can take care of it, do so and know they will delete 30-45 days after receiving final payment.

As for the collections, in my experience, if you can get them deleted, that will help her score. Otherwise, as birdman said, it does little score-wise to pay them off, other than look a little better under manual review, and more than likely if she ever went for a mortgage, they would require her to pay off all outstanding bad debts (collections, COs, etc).

As for charge offs, yes, paying those helps out a lot because they will no longer update monthly and suppress her scores, but even if they aren't updating monthly, the utilization hit will go away since COs are treated as maxed accounts by FICO. Once they are paid to zero, that will no longer be the case. As others have said, try to work something out with Barclays if it hasn't gone to an outside collection agency yet. Cause then you'd be hit with a double-whammy; CO from Barclays PLUS another collection on her CR for that account.

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Brian_Earl_Spilner — Wed, 29 Jul 2020 13:17:06 GMT

I'm assuming Barclay is not in collections, just charged off. If you check out my thread, I've been tracking my scoring changes after one of my reports had all collections removed, but still has 1 chargeoff on it that updates monthly. So EQ has 1 chargeoff, while the other two have the chargeoff and 3 collections reporting. EQ was stable while the others stayed volatile during utilization changes throughout the month.

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Collections-and-Score-Volatility/td-p/6077824

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Wed, 29 Jul 2020 14:58:04 GMT

Thanks everybody for the responses thus far. There were some questions folks had been asking that I can clarify:

Regarding item 3: As best I can tell Barclays still owns the debt and they are indeed reporting it every month on her credit report(s). At one point there was a law firm sending her postal letters asking for payment, I think that law firm was representing Barclays directly. The interesting thing is the law firm had apparently filed some sort of lawsuit (which my girlfriend was not even aware of) but then ultimately decided to dismiss the case. She only became aware of this suit when she received a dismissal notice.

Are banks (Barclays specifically) willing to negotiate large discounts to settle a charge-off account that they still have in-house?
Are banks (Barclays specifically) willing to do a PFD on a charge-off account?

Regarding the Portfolio Recovery Associates collections account: I believe we have leverage to negotiate aggressively on this one since it is past the SOL.

What do you think is a aggressive but realistic amount to offer to settle this $650 debt?

Other details: I am fortunate to have perfect credit and strong income so I am the sole owner of the mortgage (and did not have any difficulty qualifying without a co-applicant). Additionally, my girlfriend does not have any short/medium-term needs to apply for credit so we are in a good position where her poor credit is not causing any significant issues right now and we can afford to be patient&strategic with how we tackle her issues.

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

gdale6 — Wed, 29 Jul 2020 17:23:47 GMT

@Anonymous wrote:
Thanks everybody for the responses thus far. There were some questions folks had been asking that I can clarify:

Regarding item 3: As best I can tell Barclays still owns the debt and they are indeed reporting it every month on her credit report(s). At one point there was a law firm sending her postal letters asking for payment, I think that law firm was representing Barclays directly. The interesting thing is the law firm had apparently filed some sort of lawsuit (which my girlfriend was not even aware of) but then ultimately decided to dismiss the case. She only became aware of this suit when she received a dismissal notice.
Are banks (Barclays specifically) willing to negotiate large discounts to settle a charge-off account that they still have in-house? Not really especially if its still within states SOL, 75% is trypically the lowest they will accept.
Are banks (Barclays specifically) willing to do a PFD on a charge-off account? No

Regarding the Portfolio Recovery Associates collections account: I believe we have leverage to negotiate aggressively on this one since it is past the SOL.
What do you think is a aggressive but realistic amount to offer to settle this $650 debt? Start at 50% if inside SOL, 30% if outside but be careful if its still inside SOL as PRA likes to sue for full balance.

Other details: I am fortunate to have perfect credit and strong income so I am the sole owner of the mortgage (and did not have any difficulty qualifying without a co-applicant). Additionally, my girlfriend does not have any short/medium-term needs to apply for credit so we are in a good position where her poor credit is not causing any significant issues right now and we can afford to be patient&strategic with how we tackle her issues.

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Fri, 31 Jul 2020 13:23:14 GMT

Thanks, so is there any point in paying off the $650 Cap1 collections account if she doesn't have the money to address the Barclays Charge-off for a while?

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

gdale6 — Fri, 31 Jul 2020 14:17:40 GMT

@Anonymous wrote:
Thanks, so is there any point in paying off the $650 Cap1 collections account if she doesn't have the money to address the Barclays Charge-off for a while?

Sure, peace of mind and one that stops updating monthly, be that further along when the Barclays gets addressed

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Fri, 31 Jul 2020 15:16:13 GMT

So her current FICO is ~675. Do you have an estimate of how much it would go up if she does a PFD on the $650 Cap1 (but does not address the Barclays CO yet)?

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Fri, 31 Jul 2020 18:35:24 GMT

It depends on if it’s regularly updating, it depends on what the credit limit of that card is, what her total credit limit is, there’s such a variety of factors, it will reduce utilization which adds points but if there’s a catch-up penalty due to it not regularly updating, then that offsets those points, so it’s kind of hard to say without more information and then it’s still just a guess.

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Sun, 02 Aug 2020 16:59:51 GMT

Ah I see, ok thanks for the response

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Sun, 02 Aug 2020 17:38:48 GMT

@Brian_Earl_Spilner wrote:
I'm assuming Barclay is not in collections, just charged off. If you check out my thread, I've been tracking my scoring changes after one of my reports had all collections removed, but still has 1 chargeoff on it that updates monthly. So EQ has 1 chargeoff, while the other two have the chargeoff and 3 collections reporting. EQ was stable while the others stayed volatile during utilization changes throughout the month.

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Collections-and-Score-Volatility/td-p/6077824

@Brian_Earl_Spilner and that's an awesome contribution you made in helping us understand the difference between the PR scorecards and the delinquency scorecards.

Now we know the PR scorecards are more sensitive than the delinquency scorecards to utilisation changes. Matter fact, I think I'm gonna add a link to the Scoring Primer and add that information. Thank you, by the way!

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Sun, 02 Aug 2020 17:51:12 GMT

@Anonymous And I'm speaking of the chargeoff. As for the collection, unless it's deleted, it offers no score benefit and it doesn't matter whether it's deleted now or later. The chargeoff, on the other hand, is getting worse the longer it goes unpaid whereas the collection is static.

So I would be more worried about taking care of the chargeoff, so that there is no further penalty and the scores are no longer suppressed. Then, you have to work on the collections and getting both of them deleted. Jmho.

Good luck to you I hope to hear of great results!

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Brian_Earl_Spilner — Sun, 02 Aug 2020 18:02:02 GMT

@Anonymous wrote:
@Brian_Earl_Spilner wrote:
I'm assuming Barclay is not in collections, just charged off. If you check out my thread, I've been tracking my scoring changes after one of my reports had all collections removed, but still has 1 chargeoff on it that updates monthly. So EQ has 1 chargeoff, while the other two have the chargeoff and 3 collections reporting. EQ was stable while the others stayed volatile during utilization changes throughout the month.

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Collections-and-Score-Volatility/td-p/6077824
@Brian_Earl_Spilner and that's an awesome contribution you made in helping us understand the difference between the PR scorecards and the delinquency scorecards.

Now we know the PR scorecards are more sensitive than the delinquency scorecards to utilisation changes. Matter fact, I think I'm gonna add a link to the Scoring Primer and add that information. Thank you, by the way!

EQ finally budged by 2 points when my overall UTI hit 20%. I'm thinking navy Platinum going from 0 to 31% is actually what did it, but I gained it back when my retail card balance dropped $59. I also gained points for TU and EX for that $59 balance decrease as well. Makes me wonder if they score retail and bank cards differently for utilization. I'll post screenshots later

Re: Difference Between 2 collections and 1 collections accounts on Credit Score

Anonymous — Sun, 02 Aug 2020 18:24:40 GMT

They are treated differently in some respects, TU keeps separate tallies for retail utilization, for a reason, I suppose. Don't know exactly.