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Difference Between 2 collections and 1 collections accounts on Credit Score

jcs961
Member

Difference Between 2 collections and 1 collections accounts on Credit Score

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?

18 REPLIES 18
BmoreBull
Established Contributor

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


@jcs961 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. 



Starting Fico Scores:November 2019

Current Fico Scores: January 6, 2021
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Message 2 of 19
ThetoriParadox
Frequent Contributor

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

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.

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Message 3 of 19
jason_l
Valued Member

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

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. 
 

Message 4 of 19
Caprisun987
Frequent Contributor

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

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). 

Message 5 of 19
Birdman7
Super Contributor

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


@jcs961 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.

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Message 6 of 19
OmarGB9
Community Leader
Super Contributor

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

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.


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Message 7 of 19
Brian_Earl_Spilner
Community Leader
Mega Contributor

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

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/60...




Message 8 of 19
jcs961
Member

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

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.

  1. Are banks (Barclays specifically) willing to negotiate large discounts to settle a charge-off account that they still have in-house?
  2. 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.

  1. 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. 

Message 9 of 19
gdale6
Moderator

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


@jcs961 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.

  1. 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.
  2. 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.

  1. 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. 


 

Message 10 of 19
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