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Impact of old derogs

Dee-1972
Valued Member

Impact of old derogs

I was wondering, does anyone know the impact of old derogs on your credit score.  I am hoping for a mortgage in July of next year, fico's are 682, 688, & 687.  I have been playing around with the score simulator and its predicting the only way my credit score will increase is if I pay down $16,000 of my $20,000 student loan debt.  If I continue to pay my credit cards and loans monthly, only my transunion will increase by 5 points.  I have 2 student loans on my report that are derogatory.  Last DoD will be 4 years in March, one has been paid in full and the other rehabilitated.  However, they are both there as collection accounts.  Are these 2 derogs gonna keep my score from advancing for the next 3 years until they fall off?  If that is the case, I feel like all that I am doing is useless.  It is virtually impossible to pay down $16,000 before July to get my ficos above 700 for a better interest rate.  I have read that over time, negative marks don't weigh as much, anyone know at what point derogs even though on your report, don't affect your score as much?  
Thx....

8 REPLIES 8
blueivory
Contributor

Re: Impact of old derogs

I have 5 derogs (1 collection), 4 included in bk chargeoffs.  Plus a bankruptcy.  All between 5 and 6 years old.

 

I've been carrying an absurd amount of debt, and I just got it down to <10%.  One score is 701.  The others don't look like they will get there until the derogs come off.

 

On the other hand, my mortgage scores are 724, 711, and 685 (the 685 is the one report showing the collection).

 

I would focus on getting your credit cards payed down as much as possible, possibly with only one reporting <3%.  That is never in the simulators and gives a boost.  Also, take a look at those collections and everything that they are reporting.  Read the FCRA and challenge anything inaccurate.  Losing one or both of the collections would probably give you a big boost.  If not, its really time that will be the bugger.  But seriously.  Read the FCRA and related laws.  I'm kind of obsessing over my scores right now and I finally... after nearly 6 years of bankruptcy... am reading through it and coming up with a plan to fight inaccuracies that have been bugging me and I've never taken the energy to challenge properly because I was too lazy to read some laws.

 

I got my first mortgage with a 680.  It's doable.  Just higher interest.

 

 


Starting Score:EXP: 616 (2/2015) TU: 602 (2/2015) EQ: 565 (7/2013)
Current Score: EXP: 685 TU: 674 EQ: 674
Goal Score: 700
Message 2 of 9
calyx
Super Contributor

Re: Impact of old derogs


@Dee-1972 wrote:

I was wondering, does anyone know the impact of old derogs on your credit score.  I am hoping for a mortgage in July of next year, fico's are 682, 688, & 687.  I have been playing around with the score simulator and its predicting the only way my credit score will increase is if I pay down $16,000 of my $20,000 student loan debt.  If I continue to pay my credit cards and loans monthly, only my transunion will increase by 5 points.  I have 2 student loans on my report that are derogatory.  Last DoD will be 4 years in March, one has been paid in full and the other rehabilitated.  However, they are both there as collection accounts.  Are these 2 derogs gonna keep my score from advancing for the next 3 years until they fall off?  If that is the case, I feel like all that I am doing is useless.  It is virtually impossible to pay down $16,000 before July to get my ficos above 700 for a better interest rate.  I have read that over time, negative marks don't weigh as much, anyone know at what point derogs even though on your report, don't affect your score as much?  
Thx....


If your student loan is brought down to under 8.9%  (and your 16k of 20k definitely matches that), then you would probably get a boost (it's a pretty well documented threshhold).   Unfortunately for most of us, that's not exactly possible.

The impact of the 'collections' will reduce over time, as long as they're listed as paid.   If you have late payments, time will get their impact to lessen as well, unless they are 90 or 120d lates - those have a huge impact for the entire 7 years that they are on  your report.   

Honestly, keep plugging away, the longer your positive credit history, the better your score.   Age of your accounts (youngest, average) will have impact, as well, so definitely don't open anything new.    As your account ages cross threshholds, your score should improve.

One thing I would suggest is writing Goodwill Letters (you can search in the forum for examples) to the student loan companies to see if they will remove the derogs for you.   It costs nothing but some time and stamps to try.

RIP:

F8 EQ: 809 | EX: 802 | TU: 805 | Accounts: 0/6 3/12 5/24
Happy practitioner of AZE7or8or9or10 | Team Finances > FICO
Message 3 of 9
RobertEG
Legendary Contributor

Re: Impact of old derogs

Old derogs in the form of monthly delinquencies, a charge-off delinquency, or a collection, continue to have increased negative scoring impact if they are updated with a status of unpaid (still delinquent).  That updating shows that the period of delinquency since date of initial delinquency is continuing to increase, and thus there is increased negative payment history impact.

 

Once the debt is paid, any updating reporting normally ceases, but even if updates are reported, the current status is no longer one of delinquency, and thus there is no extension of the period since initial delinquency.

 

Thus, the impact of old derogs is dependent upon whether or not the debt has been paid (or otherwise discharged).

Message 4 of 9
Dee-1972
Valued Member

Re: Impact of old derogs

Thanks for your reply, I keep my my utilization <5%, its just the 2 dept of ed loans that are hindering my progress.  I will try to goodwill them, seems like that is really hard to accomplish.  They were rehabilitated and paid in full but derogs are still there.  Will cross my fingers and hope for the best....

Message 5 of 9
Dee-1972
Valued Member

Re: Impact of old derogs

Thanks for the advice Calyx, I will try the goddwill strategy and see if I catch a break!

Message 6 of 9
Dee-1972
Valued Member

Re: Impact of old derogs

Hi RobertEG, They are paid in full, so hopefully after 4 years they are not affecting me quite as much now, and even less later.... Just want to get my ficos to 700 by July next year when I plan to purchase a home, I am remaining as positive as I can....thx!

Message 7 of 9
WarCulture
Frequent Contributor

Re: Impact of old derogs


@Dee-1972 wrote:

Thanks for your reply, I keep my my utilization <5%, its just the 2 dept of ed loans that are hindering my progress.  I will try to goodwill them, seems like that is really hard to accomplish.  They were rehabilitated and paid in full but derogs are still there.  Will cross my fingers and hope for the best....


Tell them you're hoping for an early christmas present. In all seriousness, goodluck, there are plenty of success stories to give one hope. 

FICOs: EQ - 730 / TU - 735 / EX - 736
WALLET: CL 70K / UT 1%

"An investment in knowledge pays the best interest." - BF
Message 8 of 9
calyx
Super Contributor

Re: Impact of old derogs


@Dee-1972 wrote:

Thanks for your reply, I keep my my utilization <5%, its just the 2 dept of ed loans that are hindering my progress.  I will try to goodwill them, seems like that is really hard to accomplish.  They were rehabilitated and paid in full but derogs are still there.  Will cross my fingers and hope for the best....


Being rehabbed and paid in full pretty much gives you the best chance for success that I can think of.  Plenty of servicers remove all negative information (even though it is not required) after a rehab.   Stay humble and polite, bring up your good history (the rehab and PIF), and I think you've got a better shot than many people who have had success.   Student Loan servicers are pretty tough, I still think you have a good shot with those positives.

RIP:

F8 EQ: 809 | EX: 802 | TU: 805 | Accounts: 0/6 3/12 5/24
Happy practitioner of AZE7or8or9or10 | Team Finances > FICO
Message 9 of 9
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