Question about a closed CC on credit report

Anonymous · ‎07-14-2013

I have a CC that was closed/charged off in April 2011. The CC is listed under "Closed Accounts" in my credit report and it reports it has a balance and that it was charged off. Since 2011 I have been receiving letters (first the original lender, now various other debt collectors) asking me to pay off the debt and some even offering up to 30% off the balance due. Under "Collections" in my credit report, I have nothing being reported. I don't recall any of the letters stating that if I didn't pay my balance they would report it under "Collections" or anything like that.

Questions:

1) How do accounts get listed under "Collections" in credit reports? Is this something the original lender would have to initiate or can the non-original debt collectors do this as well?

2) Is an account listed under "Collections" any more bad than one listed in "Closed Accounts"? The only thing I can think of is that the account would stand out as it is under a separate section of it's own. Maybe I'm wrong but I think all that would happen is that you are moving one section of the credit report to another section.

2) Since more than 2 years have passed since this account was closed, how likely is it to be reported under "Collections" in my credit report? If it was reported under "Collections", would this affect my credit score? Would any future lenders care about this?

Anonymous · ‎07-14-2013

@Anonymous wrote:
I have a CC that was closed/charged off in April 2011. The CC is listed under "Closed Accounts" in my credit report and it reports it has a balance and that it was charged off. Since 2011 I have been receiving letters (first the original lender, now various other debt collectors) asking me to pay off the debt and some even offering up to 30% off the balance due. Under "Collections" in my credit report, I have nothing being reported. I don't recall any of the letters stating that if I didn't pay my balance they would report it under "Collections" or anything like that.

Questions:

1) How do accounts get listed under "Collections" in credit reports? Is this something the original lender would have to initiate or can the non-original debt collectors do this as well? A creditor and/or collections agency would report them as such.

2) Is an account listed under "Collections" any more bad than one listed in "Closed Accounts"? The only thing I can think of is that the account would stand out as it is under a separate section of it's own. Maybe I'm wrong but I think all that would happen is that you are moving one section of the credit report to another section. They are equally harmful to your report. One from the OC reporting their CO in the account section and the other from a CA reporting their collections of the CO. Both are scored negatively by FICO.

2) Since more than 2 years have passed since this account was closed, how likely is it to be reported under "Collections" in my credit report? If it was reported under "Collections", would this affect my credit score? Would any future lenders care about this? Hard to say if it will but yes it can. For up to 7.5 years from the DoFD. It will definitely impact your score in a big way. Yes, future lenders would care, some maybe more or less than others, depending on the age.

Anonymous · ‎07-14-2013

guiness56 wrote: Hard to say if it will but yes it can. For up to 7.5 years from the DoFD. It will definitely impact your score in a big way. Yes, future lenders would care, some maybe more or less than others, depending on the age.

Any ideas why it has not been reported as such on my credit report? Since the account is indeed in the process of collections. At this point, if someone wanted to list the account in "Collections" of my credit report, would it be the OC or the CA? The letters from the OC for collecting the debt stopped after it was turned over to the CAs.

guiness56 wrote: They are equally harmful to your report. One from the OC reporting their CO in the account section and the other from a CA reporting their collections of the CO. Both are scored negatively by FICO.

In the future, if the account was to be listed in "Collections", are you saying my score would drop? If so, does this mean my score is subject to a big drop if someone decides to list this account in "Collections"?

Another question:

Let's say this account gets listed under "Collections" in the future. If I pay it off, would this account still show on my credit report under "Collections" for the standard "up to 7.5 years" as with closed accounts? Or once paid, would it simply drop off from the "Collections" section?

Anonymous · ‎07-14-2013

@Anonymous wrote:
guiness56 wrote: Hard to say if it will but yes it can. For up to 7.5 years from the DoFD. It will definitely impact your score in a big way. Yes, future lenders would care, some maybe more or less than others, depending on the age.

Any ideas why it has not been reported as such on my credit report? Since the account is indeed in the process of collections. At this point, if someone wanted to list the account in "Collections" of my credit report, would it be the OC or the CA? The letters from the OC for collecting the debt stopped after it was turned over to the CAs. It could be the OC if they use internal collections or a 3rd party collection agency. The OC account would be listed as collections on the actual account. Not all creditors report to the CRAs.

guiness56 wrote: They are equally harmful to your report. One from the OC reporting their CO in the account section and the other from a CA reporting their collections of the CO. Both are scored negatively by FICO.

In the future, if the account was to be listed in "Collections", are you saying my score would drop? If so, does this mean my score is subject to a big drop if someone decides to list this account in "Collections"? Yes and Yes. How much is hard to actually say. The higher your score the bigger the drop.

Another question:

Let's say this account gets listed under "Collections" in the future. If I pay it off, would this account still show on my credit report under "Collections" for the standard "up to 7.5 years" as with closed accounts? Or once paid, would it simply drop off from the "Collections" section? It would show as a paid collections and stay for up to 7.5 years from the DoFD. Closed accounts do not necessarily get removed at 7.5 years. If they are in good standing a closed account can stay for up to 10 years from date closed. Good standing meaning never a CO or collections.