Question ... paying recent debts versus paying old debts

[Anonymous]

So I'm making a plan to pay off collections (ideally PFD but we'll see). I have a bill with a DoFD of 4/15. The others are from 2013 and earlier. 

Is it generally better to pay off more recent debts first, or does it matter? I'm not looking for a mortgage or anything, just working on steadily improving my credit. 

Thanks! 

[RobertEG]

There are a few factors that I would consider, as no one way is always best.

First, is the debt still within SOL?

If still within your state statute of limitations, you must consider the possibility of their filing civil action to seek a judgment.

Second, has a debt collector already reported, or is the onlyy current reporting that of the creditor?

Paying debts that have not yet been sold or referrd to a debt collector can prevent the reporting of a collection, adding an additional derog.

Third, how long before credit report exclusion?

You might consider offering a PFD if the OC or collection has a long period until its credit report exclusion.

Fourth, is the debt collector or creditor making regular monthly updates?

If so, that reporting is continuing to depress scoring, and paying those first will terminate updates and permit the derog to begin aging.

[Anonymous]

Any other thoughts on this ... a lot of information above, but it didn't really answer the question

[Anonymous]

From reading the forums (I haven't paid off any collections, so I can't verify it myself), it seems that you'll generally have better luck getting PFDs on older items, so that's where I'd personally start with PFD efforts. The caveat is that if you've got a collection that is about to fall off your report, it's totally your call as to whether you pay it or just let it fall off. The downside to that approach is if you're later required on a finance application to list all unpaid delinquent debts.

In terms of just paying off the collections (disregarding PFDs), I'd start with the ones that have most recently impacted your report. If you've got a $500 collection from 2015 that reported in July 2015 but hasn't updated since, and have a $500 collection from 2012 that has updated every month, I'd pay the 2012 collection first.

Another way you could do it could be to snowball your collections, starting with the smallest one first, then pay them in ascending order.

The best thing you can do (besides PFD) is get the most recently reporting collections paid off so they stop updating. The more recent a collection, or the more recently an older collection is reporting, the more effect it has on your score.

So, to sum up everything I said, here's the plan I would do:

1. Send PFDs for anything and everything I can. If they work, great! If they don't work, then...
2. Pay off most recently reporting collections first, then work backwards from there
3. Start sending GW letters to CA to try to have paid collections deleted

[Anonymous]

Me personally. I'd pay the most recent items, and try for PFD in the process.  The biggest reason I would do this is to prevent the filing of a judgement. I have 3 on my reports and, though they are paid, they are klling my scores and they are virtually impossible to get removed early.   Plus, as mentioned, paying will prevent further updates and further collection efforts or tradelines being reported, which will damage your score too. The more recent an item is, the more damage it does to your score.    

That being said, I have a few really old CO's (over 6 years) that are updating every freaking month as "late", even though zero collection efforts are taking place.  But, my reports show recent late payments and, thats not really true.  I haven't made any payments on these old accts since 2010 and everything else (student loan, car loans, new credit) has perfect pay history. I am getting no credit for that though, since I also have lates reporting every month.  One will fall off in August, the other in March and I CANNOT WAIT.  

It's really up to you how you want to handle it I guess.  Study your reports and your state laws and see what is really doing the most damage (or has the potential to) and start there.