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Paid Collection that has been at $0 updated but lowered score

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jsecook
Valued Member

Paid Collection that has been at $0 updated but lowered score

Good morning all. 

 

I had a paid collection that updated 2 months ago as paid and $0 balance. They just updated on the 9th of this month and still reporting $0 balance but it lowered my score 4 points?? Nothing else on the report has been updated or changed. I thought they didn't update collections once they have been posted at $0 balance and closed? 

 

Why would they do this and why would it drop my score? I'm in the process of getting a mortgage... 

Message 1 of 8
7 REPLIES 7
Whitneyy
Valued Contributor

Re: Paid Collection that has been at $0 updated but lowered score

Who is the company the collection is with? 

 

GOAL - 700 FICO across the board!
Message 2 of 8
jsecook
Valued Member

Re: Paid Collection that has been at $0 updated but lowered score

Robinson Reagan and Young. Collection was for a Utility bill from 2015 but paid in August in full. 

Message 3 of 8
simplegirl
Valued Contributor

Re: Paid Collection that has been at $0 updated but lowered score

They should not still be updating if it has been paid to a zero balance.








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Message 4 of 8
RobertEG
Legendary Contributor

Re: Paid Collection that has been at $0 updated but lowered score

The collection was based on a delinquent debt for which the period since initial delinquency continued to increase until the date it was finally updated with the CRA to show a new non-delinquency status of Paid.

 

When you paid the collection, the required update to show the collection was closed with a  $0 balance also updated and extended the reported period of total debt delinquency as the time from DOFD up to the updated reporting date.

That resulted in scoring impact on the collection.

Message 5 of 8
jsecook
Valued Member

Re: Paid Collection that has been at $0 updated but lowered score

I do understand that, however it reported to the my reports as paid 0 balance October 1st. And then 11/9 updated again as paid 0 balance. 

So, the only reason for the score drop was them updating on the 11/9 date and reporting a 0 balance for a second time. 

Message 6 of 8
Beanie87
Valued Member

Re: Paid Collection that has been at $0 updated but lowered score

Hi,

 

I had a similar situation where I paid off a collection agency in full in July and each month they updated a $0 balance until October which kept suppressing my scores because FICO reads it as a new negative. I ended up disputing this directly with CRA stating the company was poisoning my scores and report. I was able to get it removed from all 3 credit bureaus. Company I was dealing with was Credit Control Corportation. 







Message 7 of 8
RobertEG
Legendary Contributor

Re: Paid Collection that has been at $0 updated but lowered score

Yes, the standard credit reporting manual used by each of the big-3 CRAs does include advisement that debt collectors cease to make regular monthly updated reporting once a collection is updated to show closed, paid, $0 balance.

That is not a requirement of the FCRA or any regulations.  It is a CRA policy that is intended to remove unnecessary work for all parties if nothing thereafter changes.  It is also not stated as a general prohibition.

 

The FCRA, in section 623(b), specifically requires a furnisher to promptly report an update whenever any previously reported information changes or has been found to be inaccurate.  Thus, if any information previously reported under the collection requires update or correction, the debt collector is REQUIRED to make updated reporting. 

 

The CRA policy to cease updated reporting thus applies only to when the update does not submit changes that are necessary to maintain the accuracy of the previously reported information.  It is not an absolute bar against updated reporting.

 

Did the update change anything,even though it was only a repetition of the current status of closed, paid, $0 balance?

If so, it is required updating that is not inconsistent with CRA reporting policy.

 

However, even if updated reporting is made that changes nothing, it should not have a negative scoring impact.

The prior update to show paid, $0 balance removed the status from continued delinquency, and thus fixed and finalized the total period since initial delinquency.  Thereafter, the period of delinquency is not extended by any updated reporting, and should not negatively impact credit scoring. In fact,the time since termination of delinquency has begun to increase, which has only positive scoring impact.

 

I would venture a guess that something else in your credit file has also changed, such as any other delinquent accounts having updated, that resulted in a separate negative scoring impact.  Any score decrease likely did not result from the collection "update."

 

 

Message 8 of 8
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