topic Re: What would you do? in Rebuilding Your Credit

What would you do?

gotcredit — Fri, 05 Mar 2021 15:56:34 GMT

I'm figuring out if it makes economic sense to pay off old debts. Since most of the derogs will fall off in ~2 years (TX - 7 years), I'm not sure the cost outweights the benefit. More details below.

Derog 1 - reporting monthly

Charge-off

Balance: $1,100

Settlement: $550

Derog 2-5 - reporting monthly

4 Collections (same agency)

Balance: $3,000

Settlement: $1,000

Derog 7-8 - reporting monthly

2 Collections (same agency)

Balance: $3,000

Settlement: $1,650

Total cost (settlement): $3,200

I've considered getting a car so naturally I'll save on interest with a higher score. I also run a business but not sure that I'll need access to capital in the next year. Also, no plans on purchasing a primary residence, but maybe a rental property.

What would you do? Wait a few years and let the debts fall off, or pay the ~3200?

Re: What would you do?

Anonymous — Fri, 05 Mar 2021 16:32:46 GMT

@gotcredit wrote:
I'm figuring out if it makes economic sense to pay off old debts. Since most of the derogs will fall off in ~2 years (TX - 7 years), I'm not sure the cost outweights the benefit. More details below.

Derog 1 - reporting monthly
Charge-off
Balance: $1,100
Settlement: $550

Derog 2-5 - reporting monthly
4 Collections (same agency)
Balance: $3,000
Settlement: $1,000

Derog 7-8 - reporting monthly
2 Collections (same agency)
Balance: $3,000
Settlement: $1,650

Total cost (settlement): $3,200

I've considered getting a car so naturally I'll save on interest with a higher score. I also run a business but not sure that I'll need access to capital in the next year. Also, no plans on purchasing a primary residence, but maybe a rental property.

What would you do? Wait a few years and let the debts fall off, or pay the ~3200?

Paying/settling CAs will not help your scores. Who are the CAs? They all need to PFD. That is when you will see a score boost - when the last CA comes off (regarding CAs).

I would definitely settle the CO. That should hopefully help your score some.

Re: What would you do?

mycreditscoreisfair — Fri, 05 Mar 2021 17:02:15 GMT

I would repay the debts simply from a moral/integrity standpoint, if I were financially able to.

@Anonymous already gave a nice explanation for increasing your scores with the payments. If you can afford it and can get the collections to delete, then it's a no brainer in my opinion.

Re: What would you do?

MauiMan85297 — Fri, 05 Mar 2021 21:30:31 GMT

Exactly what Hoss says, it's the CO that weighs the heaviest. Here in the mortgage industry we'd tell you that the CO has to be paid where most likely the automated system wouldn't require you to pay off CA's (most times it would hurt your score because you re-age the account unless you PFD).

Re: What would you do?

Anonymous — Fri, 05 Mar 2021 21:50:41 GMT

@MauiMan85297 wrote:
Exactly what Hoss says, it's the CO that weighs the heaviest. Here in the mortgage industry we'd tell you that the CO has to be paid where most likely the automated system wouldn't require you to pay off CA's (most times it would hurt your score because you re-age the account unless you PFD).

Nothing can re-age the DoFD (date of first of delinquency) - paid, partially paid, or unpaid.

Just tge presence of a CA puts you on a PR (public record) scorecard and weighs your scores down heavily.

I went from over a dozen CAs last year down to 3. As each came off, I saw 0-3 pts for each. Mostly zero score change.

My SO (significant other) had quite a fee CAs, too, and when his last one came off, that is when he saw a good score bump. 30pts +/-. This is with still 2 COs present at the time. His scores have started to rebound nicely since the last CA came off. EQ still has 1 CA and that bureau's scores seem to have the most issue, even though EQ has the least number of lates (by 30!) and derog accounts overall.

Re: What would you do?

House2021 — Sat, 06 Mar 2021 02:53:55 GMT

Who owns accounts 2-5? That's an excellent settlement offer, don't suppose its Portfolio, Midland, or Cavalry is it?

Re: What would you do?

gotcredit — Sat, 06 Mar 2021 04:25:20 GMT

LVNV Funding

Re: What would you do?

Anonymous — Sat, 06 Mar 2021 06:06:03 GMT

LVNV is open to PFDs - paying them off could mean they're gone in two months rather than two years...

Re: What would you do?

OmarGB9 — Sat, 06 Mar 2021 21:07:49 GMT

@Anonymous wrote:
LVNV is open to PFDs - paying them off could mean they're gone in two months rather than two years...

And who owns accounts 6-8?