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@rubicon wrote:
Also how can this company report late payments on me monthly when I never had an agreement with them. Does that mean if I make a $20 payment to them each month that they have to report it as on time?
It is reporting that it is still derogatory, which is being handled as being 'late'. This is because it is late. It was due a long time ago, and they have collection authority meaning that when they sent you a bill it was 'due on receipt'. There are no terms with you, no, because they are not extending you credit. The agreement they have with you does not need a contract from you, as you owe the debt.
With that being said, you should pay them off. Yes, reducing your util will have a more immediate benefit to your score, but you aren't near maxed, so as long as you keep chipping away at your balance for more than the minimum payment, you are handling those correctly.
If you have any goals to get loans that require underwriting, both your util and outstanding past-due debt will become important. The sooner you get rid of the collections, the sooner they will start to be in the rear-view mirror.
Once those are paid off, continue working on getting your util down to that less than 9% overall. Keep in mind that even less than 30% is going to be a decent bump.
Debt collectors do not bill consumers, and do not report monthly delinquencies to a CRA.
There is no billing due date upon which they can calcualate a reportable length of a delinquency to a CRA.
Only the OC can report monthly lates, and can continue to do so, even if they have reported a charge-off.
While debt collectors dont explicitly report monthly delinquencies, if they are making regular monthly updated reporting, then in the eyes of FICO, they are making continued, updated reporting that the debt remains unpaid, and thus the period of "delinquency" is now longer. Thus, while not explicitly reporting a monthly 180+ late, they are effectively reporting extended period of an unpaid, delinquent debt that does effect scoring.
If you pay the collection, you stop monthly unpdating that informs that the debt remains unpaid.
A final factor would be whether the debt is still within SOL.
All things considered, since % util is not itself a derog, and can be reduced at any future time, I would recommend paying the debt that is now charged-off and under collection.
Paying the collection may also improve chances of the later to be sought CLIs.
@RobertEG wrote:Debt collectors do not bill consumers, and do not report monthly delinquencies to a CRA.
There is no billing due date upon which they can calcualate a reportable length of a delinquency to a CRA.
Only the OC can report monthly lates, and can continue to do so, even if they have reported a charge-off.
While debt collectors dont explicitly report monthly delinquencies, if they are making regular monthly updated reporting, then in the eyes of FICO, they are making continued, updated reporting that the debt remains unpaid, and thus the period of "delinquency" is now longer. Thus, while not explicitly reporting a monthly 180+ late, they are effectively reporting extended period of an unpaid, delinquent debt that does effect scoring.
If you pay the collection, you stop monthly unpdating that informs that the debt remains unpaid.
A final factor would be whether the debt is still within SOL.
All things considered, since % util is not itself a derog, and can be reduced at any future time, I would recommend paying the debt that is now charged-off and under collection.
Paying the collection may also improve chances of the later to be sought CLIs.
This is not necessarily true - the CA can update the account monthly with a CA status and the CRAs translate that to a late recency of that update (ie 1 month since last late).