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Overwhelmed UGH

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Anonymous
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Overwhelmed UGH

I just got married. Now, I have a baby girl on the way. Since then, I've been in super nazi mode of making sure I am saving money and getting my credit score up. Since my early 20's, I've been irresponsible with my finances. The time is now to change. 

 

I am rather frustrated though...and here's why:

 

I have 10 accounts in collections totaling $4,367. 

 

I paid 7/10 of them today. 

 

What's frustrating is, FICO 4.0, FICO 5.0, FICO 8.0 still factor in this deliquencies, while FICO 9.0, Vantage 3.0 do not once they're paid. 

 

Did I make the right decision paying those, or did I make a horrible mistake?

 

Assuming I made no mistake, how long before my credit actually rebuilds? Please do not give the "7 years until it falls of your credit report crap." I know. I'm up until 2am researching credit each and everyday -- especially lately. What I have not found answers to is this: At what point does your collections have less of an effect on your score?

 

I currently have 2 capital one cards ($500 limit, 0% utilization -- brand new), 2 USBank secured cards (14 months perfect payment history), 1 50% utilization, 2, 27% utilization. 

 

I have an auto loan with 5 months perfect payment history. Am I on the right track for rebuilding?

 

Credit Score: 598

 

Thanks for your help in advance.

Message 1 of 9
8 REPLIES 8
Anonymous
Not applicable

Re: Overwhelmed UGH


@Anonymous wrote:

I just got married. Now, I have a baby girl on the way. Since then, I've been in super nazi mode of making sure I am saving money and getting my credit score up. Since my early 20's, I've been irresponsible with my finances. The time is now to change. 

 

I am rather frustrated though...and here's why:

 

I have 10 accounts in collections totaling $4,367. 

 

I paid 7/10 of them today. 

 

What's frustrating is, FICO 4.0, FICO 5.0, FICO 8.0 still factor in this deliquencies, while FICO 9.0, Vantage 3.0 do not once they're paid. 

 

Did I make the right decision paying those, or did I make a horrible mistake?

 

Assuming I made no mistake, how long before my credit actually rebuilds? Please do not give the "7 years until it falls of your credit report crap." I know. I'm up until 2am researching credit each and everyday -- especially lately. What I have not found answers to is this: At what point does your collections have less of an effect on your score?

 

I currently have 2 capital one cards ($500 limit, 0% utilization -- brand new), 2 USBank secured cards (14 months perfect payment history), 1 50% utilization, 2, 27% utilization. 

 

I have an auto loan with 5 months perfect payment history. Am I on the right track for rebuilding?

 

Credit Score: 598

 

Thanks for your help in advance.


While FICO scores may not reflect it, paying off old debt is NEVER a horrible mistake. Even though scores may not immediately improve, the fact is that it is NOT 'all about the scores'. Its much easier getting new credit established with paid derogs, than it is with unpaid derogs, all other things being equal.

 

Yes, you are on the right path.

Message 2 of 9
Anonymous
Not applicable

Re: Overwhelmed UGH

As the collections age and your new accounts age, your scores will gradually climb. As a general rule it takes about two years before you can get into what is usually considered 'average' credit, which is high 600's.

Message 3 of 9
Anonymous
Not applicable

Re: Overwhelmed UGH

I agree with NormanFH, paying off the old debts is much better.

 

one benefit, your phone and voicemail will get a rest.  The post office will have a lighter load also.

 

IME, after I paid off most of my old debt, new credit loosened up.  I started getting offers in the mail for better CCs and better SLs.

 

I would recommend starting a GW letter campaign to ask for deletions.  I made a shell or template letter and just changed the addresses and account numbers and tried mailing a couple every month.  Sometimes it takes several letters over several months, sometimes they never work. 

 

It takes patience to get yoru credit back, and sometimes it does take the full 7 years.

 

You are on the right track though.

 

GL

 

Message 4 of 9
Anonymous
Not applicable

Re: Overwhelmed UGH

I went from 520s to 740s in 13 months I started with very bad credit. you want to get all of those collections off of your reports those hurt you even if they are paid.

Message 5 of 9
Anonymous
Not applicable

Re: Overwhelmed UGH

How did you get them off of your report?

 

I tried Pay for delete, but only 1/7 budged.

Message 6 of 9
Stevielynx
Valued Member

Re: Overwhelmed UGH

Slightly OT. I didn't know there was a Fico 9.0.
Message 7 of 9
Anonymous
Not applicable

Re: Overwhelmed UGH


@Anonymous wrote:

How did you get them off of your report?

 

I tried Pay for delete, but only 1/7 budged.


 

Personally, I didn't pay a penny, without an agreement to remove the negative line item from my credit report.

 

If a collection representative says no, I would say ok, bye. Then call back at a later date, and negotiate with another rep. I have asked to speak with supervisor and negotiate with that person. I would write letters to the collection agency, sometimes they will play ball over snail mail rather than email or telephone. If they called me, I would say, "Sure I'll pay with the agreement you remove the negative item from my credit report." If they said, they can't or won't, I replied, call me back when you will, bye.

 

IMO, it doesn't make a difference paying the debt off without the tradeline being removed from your credit reports from a credit score perspective. Maybe there is a warm fuzzy feeling. If you have a collection of $1000 and your score is 605. Paying the collection off without the negative tradeline removed, nets you -$1000 and a credit score of 605.

 

Do you think a loan officer reviewing your credit will say, "Hey, I see you have 6 collections and you paid them off, so I will ignore those and give you the loan you want because you seem to be a great guy." NOT!!

 

You are strictly being judged buy the credit report. Loan officers have criteria and processes to adhere to. Their job is to make the lender money buy giving loans to those that qualify and who can pay based on the criteria on your credit report.

 

Rant over... ;-)

 

As far as your situation.... For those collections you have paid and the collections still appear on your credit report. (Mod Cut-This is a violation of credit repair guidelines) 

 

(Sorry Mod - Reformulated response)

Look for any inconsistencies on each of the collection items. If there are inconsistencies, verify whether it is a minor mistake, or if the collection is actually yours. If you feel the collection isn't yours, suggest dispute process with CRAs. Or perhaps you can contact those collection agencies and ask that they produce documentation verifying the dept. If they can not produce such verification, then they have no legal right reporting the collection on your credit report. The issue you may run into from the collection agencies is, you have paid the debt, which is a somewhat of a verification that the debt is yours. Additionally, paying the collection which may or may not be yours, heavily reduces your leverage of producing the preferred outcome results.

 

At the end of the day, a collection on an other wise flawless report that has been reporting for two years, decreases your score 60-100 points. At the two year mark, you pay this collection, whether yours or not, let's say $1000. You make the choice not to verify the debt, or negotiate for PFD, or go to the original creditor to negotiate. In my opinion it's like saying "Thank you for punishing for the last two years, here is a $1000. Please punish me for an additional five years." This is strictly from a credit score perspective.

 

Your original question, how long before you recover from collections on your credit report from a credit scoring perspective? Depends how many collections you have. This is a total guess, so I wouldn't take it as factual. I think it is relatively generous. Collections are bombs on your credit reports. The lower your FICO score the less impact they have, conversly, the higher your score the more impact.

At the six year mark. 

1 collection paid or not -30 points

2 collections paid or not -50 points

3 collections paid or not -65 points 

4 collections paid or not -75 points

The Fico calculation only accounts for the collection, not if you paid or didn't pay. Collections have no bearing on UTI, AAoA. 

 

Here is a real example, relevant or not

Date: 04/31/2014

FICO8 score: 562 (Note: If none of the below derog's was on the CR the score would be 700-710)

Collections

1- one month old

1- one year old

1- three years old

Bankruptcy 

6 years old

The total point loss of these four derog's is about -140 points. The two fresh collections costing more, maybe 80-100. The three year collection and BK costing 40-60.

 

Good Luck.

 

 

Message 8 of 9
Anonymous
Not applicable

Re: Overwhelmed UGH


@Stevielynx wrote:
Slightly OT. I didn't know there was a Fico 9.0.

Yes, there is, but its not in use yet. Probably won't be for several more years.

Message 9 of 9
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