Collection account closed vs removed?

[User1072839]

Hello everyone, this should be a quick one. I recently had a CA show up on my EX and TU. I contacted the CA and settled, and got verbal agreement to remove (recorded). The CA reported to EX and TU as such. My CK TU score originally dropped 5 points. After they reported the settlement and closed it, that score went UP 8 points? It's still showing on TU but as closed. I realize that CK isn't a true FICO but they have been really close or right on the money. 

So is there a difference between not seeing it on the report anymore and seeing it as closed?

[Remedios]

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@User1072839 wrote:

Hello everyone, this should be a quick one. I recently had a CA show up on my EX and TU. I contacted the CA and settled, and got verbal agreement to remove (recorded). The CA reported to EX and TU as such. My CK TU score originally dropped 5 points. After they reported the settlement and closed it, that score went UP 8 points? It's still showing on TU but as closed. I realize that CK isn't a true FICO but they have been really close or right on the money. 

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Usually there is no gain from paying collection unless it's the last derog. Even that does not result in immediate scoring gain, but without future updates, score can start recovering. 

If it's your only collection and it gets deleted, then it's Fico party time. 

Vantage and Fico scoring models diverge a lot on how paying collections affects the scores. 

Basically, Vantage provides instant gratification. Fico, not so much 

[RobertEG]

Closed means that the debt collector has reported that their collection is closed to continued, active collection of the debt.

Reporting of closed can occur if the debt has been paid, if the debt collector has had their collection assignment terminated by the owner, or if they own the debt, sale to another party.

Closed does not remove the collection from scoring unless it is also deleted, and deletion is not considered by the CRAs to be proper if closure is based on payment of the debt.  It continues to be scored as a prior, major derog with a period of delinquency from the date of first delinquency up to the reported closure date.

If a collection is deleted, it is removed entirely from scoring.  CRA policy does instruct debt collectors to delete their reported collection if their collection authority is terminated and the debt remains unpaid.  If that becomes your situation, then informally ask the debt collector for deletion,and if they dont comply, file a dispute with the CRA.

It is common for debt collectors who have agreed to delete their collection to first report the collection as closed, and then delete in a subsequent reporting period.  I would give it at least one more regular reporting cycle, and then make an informal call to the debt collector if they have not yet made the agreed deletion.