New Collections Account - Not Sure How to Proceed

[Anonymous]

Hello everyone, I've been browsing the forum for a few months as I've grown my credit profile, and this is my first post. Through the Capital One built-in credit score monitor, I've noticed that my score has hovered around the 740 mark for a few months now. I was surprised when I was denied an application for a credit card. They utilized Experian for the hard pull, and reported my score as 626. So, I pulled all three credit reports/scores, and found that there's a collection on my Experian report for $138. The collection lists March 2018 as the "date opened", and the original creditor was T-Mobile. I have not had T-Mobile service in at least 6 years, maybe longer. The other two scores are 740 (Equifax) and 729 (TU). No collections on either of those reports.

My best guess is that I need to call the collections agency and simply pay the debt. Of course I don't mind paying the money, but I wonder if anyone can advise me on what the credit implications will be. I've researched a bit online and learned that, even when I pay off the debt, it's likely to remain on my report for 7 years. I just don't understand how this debt (which has to be from at least 6 years ago, but I think it's more like 7 or even 8 years old) is listed as being opened in March 2018. I only vaguely remember not paying my last bill with T-Mobile.

Should I maybe dispute the collections account with Experian? I don't mean to be cheap, and I'm happy to pay the $138, I'm just concerned about what happens next. I'd like to resolve this soon, as my credit score only recently started to improve. Over the past two months, my available credit went from $5,000 (on two cards) to $45,000 (on four cards). I'd like to continue improving and building, and I hope to put this small collections account behind me.

Any advice would be greatly appreciated. Thank you very much.

[Anonymous]

I think you should call T mobile directly( if they're the ones who put it on your report if not then call the collection agency directly) to see if they can prove that this collection is legit, first. A collection will stay on your report for 7 years unless a pay for deletion is an option. So, in reality.... if you had the account 6 yrs ago... it's still within the window. 

IF it turns out to be legit and they can prove it is... I'd try and negotiate a pay for deletion.  That way, you'll see it wiped off your report and an immediate boost in score.

This being said..I want to point out something. You mentioned that capital one in score monitoring listed you at 740. That is a vantage 3.0 score which is rarely used for lending purposes. Some people's vantage score can be either significantly higher or lower than their FICO scores. So, i wouldn't track credit scores through that app. Either monitor it through experian on a monthly or even quarterly basis or get a subscription through myfico.com. It gives you your FICO 8 scores (most widely used version) as well as other scores such as FICO 9, mortgage, Auto ficos.  Capital one is a strange bird. I think they use some older scoring model that no one else uses like bankcard 2 or 3. Not sure why they havent crossed over to the most recent versions. So, that's something else to consider when you say your score was significantly lower. 

Example: my fico 8's are 670-698 across the board but that older version is only a 620 or so. Total difference.

[Anonymous]

Thank you so much for this detailed response. I just called T-Mobile and they confirmed that I have a closed account with them. They cannot provide more information because I cannot remember the PIN. They informed me that I can visit a physical store with a photo ID to reset the PIN and access the account. Then I’ll know when the account was closed.

If it turns out that the account was closed less than 7 years ago, should I wait it out or pay the collections agency? Again, I’m not trying to be cheap, I just don’t know if paying the collections agency will result in a renewed negative date on my report that will then take 7 years (from now) to disappear.

It’s confusing that the “date opened” is listed as March 2018. Any insights on that?

Thank you again. I just signed up through Experian to watch my scores and reports more closely and accurately.

[DebtJoe]

A date opened on a collection account is when the collection agency bought the account and started to pursue the amount owed. 

For instance, a collection that just fell off my report had an open date of November 2015. This is when those vultures bought the account and started hounding me for money.

The OC (T-Mobile) most likely won't be much help here unless they are willing to recall the collection and you pay with T-Mobile. You need to contact the collection agency for information on this. I'd ask them for some type of validation. You'd at least be able to find out when the date of first deliquincy was if anything. If it's set to fall off soon, you can just tell them to go kick rocks and let it die. If you're inclined, depending on whom the collection agency is, they might already have a pay for delete policy in place, or you can try and negotiate one.

[Anonymous]

Thank you for the response. This has been incredibly helpful. I will reach out to them on Monday to see where the account stands. I'll ask what the date of first delinquincy was, and I'll ask about a pay for delete policy.

So, just to be clear, the collection agency must stop reporting this debt to the reporting agencies once the debt turns 7 years old from the original delinquincy (meaning, the first month that the account became delinquent)? Even though the "date opened" is listed as March 2018? If that's the case, it might be best to wait it out. I suspect that the 7 year mark will happen within the next few months. I'm certain that the debt cannot be older than 6 years.

Added Note: After researching the collection agency on the forums here, it seems like they do offer pay to delete. I'll be sure to get something in writing. Might as well have it removed if I can. Based on what other forum members said in their comments, the collections account was removed from their report within 2-3 weeks of paying this specific collections agency to have it deleted. I was concerned that, simply by calling and acknowledging the debt, it would be "renewed" on my report for an additional 7 years from now. Please feel free to correct me if I'm wrong.

[Anonymous]

It will fall off your report either:

1) 7 yrs after the DOFD (date of first deliquency)  or

2) After a pay for deletion is completed.

If they won't do a pay for delete, you have a few options.... either pay a settled amount and have them update it on your report to say it was settled and the balance is zero. You won't get your points lost back until it completely falls off, but by settling it...it'll stop updating.

Find out when the account was first deliquent and then go from there. If it's due to come off your report by the end of this year you'll just have to decide how to proceed.

FYI... credit bureaus will allow you to do an early exclusion. So, if for example a collection was to come off Dec 2019, with Transunion you could request them to remove it in June (6 months early), with Equifax November (1 month early) and with Experian September (3 months early).

Example:  I had a Verizon cable bill that was first deliquent Dec 2014. It sat in verizon's internal collection dept until Jan 2018 when it was bought by a collection agency. It was reported Jan 2018, and I settled Dec 2018 because the collection agency refused to do a PFD. So it shows on my report as balance 0 and settled. But won't fall off my report until 2021.

[DebtJoe]

The collection must be removed exactly 7 years and 180 days from the date of first deliquincy. You can usually get an early exclusion from the credit agencies at the 7 year mark.

You also don't need to aknowledge the debt at all if that's what you're worried about. You can simply ask two questions that are safe:

“I don’t believe this is my debt. Can you tell me more about it?”

“I’m not admitting this debt is mine, but what would it take to settle it and get it removed from my credit report?”

[Anonymous]

A sincere thank you for all of these responses. If I were to acknowledge the debt (and pay it) would that renew the 7 year waiting period? I think - and hope - that the answer is no. It sounds like it'll be best for me to pay the debt regardless so that it'll stop reporting until it falls off.

[gdale6]

---

@Anonymous wrote:

A sincere thank you for all of these responses. If I were to acknowledge the debt (and pay it) would that renew the 7 year waiting period? I think - and hope - that the answer is no. It sounds like it'll be best for me to pay the debt regardless so that it'll stop reporting until it falls off.

---

No, the DoFD is a set in stone date its illegal to change it. If you can get the PFD great another way to approach is to have the OC recall the collector in exchange for payment this gets the CA off your reports as well. Not all CAs own the debt some are engaged to collect on behalf of the owner. An OC can only recall a collector if they still own the debt.

[Anonymous]

One more question if I may. I contacted the collection agency and paid in full. They refused to do a pay for delete. They said that the last payment was made in May of 2014. I asked if they were referring to the date of first delinquency. They wouldn't say yes or no, they simply kept stating that the last payment T-Moblie received was in May of 2014.  Is that essentially the DoFD? I hope that I didn't "reactivate" the debt and restart the 7 year period from today.

If the DoFD was May 2014, it looks like it'll be approximately 2 years before it drops off my credit report. How much can I expect my 626 Experian credit score to rise - if at all - now that the debt has been paid in full but still shows on my report? If it won't rise immediately, will it rise slowly over time or remain low until 2 years from now? Will this collections account ever show on TransUnion or Equifax? My scores are relatively high with them so I'd hate to see them drop. 

Thank you all for this help. It is invaluable. I hope these questions and answers prove to be useful for someone else who experiences this.