Collection Impact

[EaglesFan2006]

Every site i read about as far as estimating credit stances and all only seems to mention credit cards and loans.  The only loan i have is student, which is current.  The delinquent accounts I have are all collections acounts, 2 for a payday loan and two for a bank overdraft (these were the original credit lines).  All these accounts are currently being paid currently with monthly payments (for about a year now, and the dates of first delinquincies are all about 3-5 years now.  How do things like those accounts compare to credit cards?

[llecs]

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EaglesFan2006 wrote:
Every site i read about as far as estimating credit stances and all only seems to mention credit cards and loans.  The only loan i have is student, which is current.  The delinquent accounts I have are all collections acounts, 2 for a payday loan and two for a bank overdraft (these were the original credit lines).  All these accounts are currently being paid currently with monthly payments (for about a year now, and the dates of first delinquincies are all about 3-5 years now.  How do things like those accounts compare to credit cards?

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There's really no comparison because, unlike CCs if factored into revolving post-CO, your balances w/ an OD CO or payday loan are not factored into utilization. Whether you owe $10,000 or $1, the damage to your score is relatively the same. Once you opt for a PFD, then you'll start to see your score increase as they accept and delete. You'll really see a bump after the last one is removed.

However, keep your AAoA in mind. If these COs are your oldest accounts, removing them may actually hurt your score. It is all relative to the age of your SL, if that is your only other account reporting. BTW, while it will hurt you AAoA to get one, adding a CC or two will tremendously help your score.

[EaglesFan2006]

thank you for this reply... so basicly its the appearance of collecions that's hurting me, and amounts are irrelevent?  These collections and the SL are the only things on my report (although, the SL appears as 4 separate items, all of which are current)

What is AA0A?

[llecs]

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EaglesFan2006 wrote:

thank you for this reply... so basicly its the appearance of collecions that's hurting me, and amounts are irrelevent?  These collections and the SL are the only things on my report (although, the SL appears as 4 separate items, all of which are current)

What is AA0A?

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You got it.

AAoA is avg. age of accounts. If you look on page 2 or 3 of any TU or EQ FICO report, you can usually find it listed. It has a heavy weight on your score. Removing old and paid COs (not CAs or PRs like a BK) can actually drop your score because your avg. age gets lowered.

IMO, the easiest way to calculate AAoA is to figure out how many months old each TL is by factoring how many months the TL had been opened (based off of the opened date on your CR). Add up each OC (payday if the OC is reporting, your settled CC, SLs, etc.) and divide it by the total of OCs reporting, convert that to years (round down) and that equals your avg. age. Changing your AAoA from 5 yrs, for example to 2 yrs would seriously drop your score. If these SLs are newer than the settlement or CO, then removing the settlement or CO would very likely drop your score. The negative effect of losing the history can outweigh the negative effect of the "charge-off" or "settlement" mention itself.

[Anonymous]

Did you ask this on Yahoo! Answers as well?  I think I just answered it a few minutes ago on there.  Took me by surprise to just reread it here!