What to pay first?

[Upgraded]

I am finally taking control of my finances and my fico score so I pulled my Credit Report and I have 7 collection accounts. However, I have decided to get things together and I want to pay all of my collections off by July 2008.

I have 7 collection accounts with the following balances $25, $93, $323, $352, $696, $1020, & 1053. Which leads me to my question... Which of the following is better for my Fico score? To pay the smaller ones off first or To gradually pay them all down equally Or does it matter?

Thanks

[Anonymous]

from what i've seen on my dad's credit report, pay down anything that you may be charged interest for first. you may also want to figure out how much you are willing to set aside per month to meet your goal, that way you're less likely to get side-tracked.

[haulingthescoreup]

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@Upgraded wrote:

I am finally taking control of my finances and my fico score so I pulled my Credit Report and I have 7 collection accounts. However, I have decided to get things together and I want to pay all of my collections off by July 2008.

I have 7 collection accounts with the following balances $25, $93, $323, $352, $696, $1020, & 1053. Which leads me to my question... Which of the following is better for my Fico score? To pay the smaller ones off first or To gradually pay them all down equally Or does it matter?

Thanks

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Hi, Upgraded, welcome to the forums!

No one thinks that this is fair or makes sense, but you get no benefit to your score by having collections on your report showing as "paid." What you will want to do is negotiate PFD's (pay for delete's) with each CA. This is a win-win situation where they get their money, and you get some relief on your reports.

Before you wander out into the minefield, please do some homework first. Read Credit Scoring 101 and Pay for Delete Example Letter, which is in the Frequently Requested Threads link. These can all be found stickied up at the top of this forum.

You can do yourself a lot of good, but you can also have some pretty ugly results if you don't have a good understanding of what you're up against and what your options are. After you read the threads, please come back and post the dates of each collection and the names of the CA's. (Most CA's are bad, some are spectacularly awful.)

[Anonymous]

Ug............congrats.on taking control of your finances. That is the first step toward clearing things up. The short answer is to deal with the most recent collections first - irregardless of the dollar amount. Meaning, that a collection from 2007 is hurting you more than a collection from 2003.

As another poster noted, don't pay anything without a PFD in place - and get it in writing. Paying a collection will not make it disappear from your report. You need to ge the collection deleted from your CR.

[Upgraded]

Thank you for your help. I have sent PFD letters to each of them on Nov 7th and I have not heard anything back from any of them. However, one called me on the phone wanting payment and they said that they recieved my letter and the Collection Ageny rep told me that they cannot delete it, they can only mark it as paid or settled for less than full balance. Is this true or false? 

If its false what should I do next? Send another letter?

Thanks for your help!

[My_dog_FICO]

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@Upgraded wrote:

Thank you for your help. I have sent PFD letters to each of them on Nov 7th and I have not heard anything back from any of them. However, one called me on the phone wanting payment and they said that they recieved my letter and the Collection Ageny rep told me that they cannot delete it, they can only mark it as paid or settled for less than full balance. Is this true or false?

If its false what should I do next? Send another letter?

Thanks for your help!

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That is FALSE. They can report to the CRBs that there is no account to report, therefore deleting the entry from your CRs. It happens very often.

But, you also want to take another look at these debts. Establish if they are within your states Statute of Limitations. If they are not, play hardball and state in your letter that since they have no legal right to collect on the debt, you are willing to send them partial payment to remove the account from your reports. You may even be able to avoid that be doing a little more research. Check and see if the CA is listed with your state as a license Collection Agency. If not, even more power behind your PFD letters.

One other consideration you may take if you have hard luck with the CAs. Contact the OC's and see if you can pay them off instead. If you can, then the CA's have no legal right to collect on the debt and MUST delete their entry from your CR. Some people play this card first before sending PFDs to the CAs.

BTW - if they aren't responding at all to your PFDs, they may not respond to a dispute with the CBs - Hint.