So here's my dilemma. I'm in the process of getting approved for a small personal loan to pay off some collections in full.
My credit report shows 1 charge-off account, and 2 medical collections from 2010. I plan to pay the charge-off in full, and one of the medical collections in full with this loan.
Question 1 - I read somewhere that in the new Fico scoring model, paid in full collections carry a better impact on your credit score than derogatory and/or settled collections. Is this true? Collections of less than 100 are disregarded by Fico 08 as they are now considered nuisance collections, anything larger and they will have same impact they always have had.
Question 2 - Also, is it true that by paying one of these medical collections in full it will still hurt my score by making the recent activity on the collection more recent? That sounds like a bug in the credit scoring system if that's true.... Yes when any account that has not been reporting on a monthly basis updates its going to affect your Fico, its not a bug but purposely built in for the collections industry for use as a tool against the consumer, all perfectly legal. If you cannot get PFD for those medicals I would suggest you just use the HIPAA Process, you can Google it and contact its creator for help with those.
The reason I ask the 2nd question is because the personal loan is through my credit union, and their credit pull only showed 1 of the 2 medical collections I have. The medical collection showing on their report is an account that the creditor hasn't updated since 2010. The other medical collection, that shows on other reports but not theirs, was also placed into collections in 2010 however they report the balance every month, so that activity is current. and by them doing so that is keeping your Fico depressed.
I just don't want to do anything stupid, I'm trying very hard to get my credit where it needs to be and build for the future.
Any advice would be appreciated!
