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Starting the rebuild process!

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Valued Member

Starting the rebuild process!

In Nov 2017 I got an installment loan to help build my credit. As of March 2018 my score went from 490's to 560's. I was able to obtain an auto loan in March and at the same time I got 3 unsecured credit cards. My current credit utilization is at 3%. My score went up to 613 as of Friday June 28th. Since I now have a good base for building credit I've started working on what is pulling my scores down. I had a charged off auto loan (that the bank never picked up after a voluntary repo in 2014). I was able to finally work a deal with them and paid it off for less than owed. I have an old credit card (also charged off in 2014) with a $450 balance that charged off and I also had 3 collections on each report 1 of which was for an account that wasn't mine ($750 from verizon) 1 for $150 and the other is only $65. I disputed the one that wasnt mine and it showed as closed on my TU and EQ report today. My score dropped 80 points on my TU and 51 on my EQ.

I guess my question is, is it even worth paying off those other collections and that credit card? If my score dropped by that much from just 1, am I going to be right back where i started in the 400's??? I feel like a lot of hard work went down the drain with that one closed acct. I haven't missed any payments and they are showing a 100% payment history. Credit utilization is still 3%. I'm at a loss at this point.

I read that maybe taking the big collection off may have put me in a different scoring bucket, but would it really cause that big of a drop???
Message 1 of 7
6 REPLIES 6
Regular Contributor

Re: Starting the rebuild process!

It looks like your score dropped from the removal due to age of account.  The CRA will remove the acct while in dispute and if its validated they will place it back, just fyi.  If it stays off, that is a good thing, your score will recover those points rather quickly coz the acct isn't being updated neg every month.  Yes continue the course, your scores will improve, just got to give it a little time for all the work to reflect and your new accounts to age a bit.  Your on your way, keep plugging along and you will be surprised where your scores are in 6mo from now, if not before.  Keep it up, the scores will come, along with better credit options in the near future.  Good Luck!!!

Message 2 of 7
Valued Member

Re: Starting the rebuild process!

That account is no longer in dispute but has been closed. It wasn't even my debt. I dont know why it would adversely affect me so much since it was indeed not my debt and the acct was closed.

I guess my question still remains, will paying off what is left on my report (which is my debt) have the same adverse affect? Or should I just leave them alone? The total outstanding debt is only about $650 between 3 accounts. But I dont want to pay them off if it is just going to hurt my score.
Message 3 of 7
Super Contributor

Re: Starting the rebuild process!

You want to pay them off so they quit reporting a balance and PIF. It will help if you can set up a PFD in return for full payment. Paid is always better than owed. Owning holds your scores down.





My posts are JMHO. My siggy is not to brag at all. Just sharing my experiences after learning here from rebuild to recovery after BK DC @ 540's. And to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 4 of 7
Community Leader
Mega Contributor

Re: Starting the rebuild process!

I am not convinced that removal of verizon account during a dispute would cause such a large drop 

 

You usually see that with old revolving or installment TLs, but not collections. Verizon was never a TL (as only negative is reported) hence not contributing to AAoA in any way (other than CK, which includes collections, rocks and stamps) 

 

@Ldennis  You keep mentioning TU and EQ, are you seeing these drops on Credit Karma? 

Message 5 of 7
Valued Member

Re: Starting the rebuild process!

Yes, I'm seeing the drop on CK. I also monitor my Experian but it hasn't had the Verizon drop off yet. On CK it listed that account as the only change. I haven't applied for anything new. No new collections, and still 100% payment history. I see no reason why it would drop like that.
Message 6 of 7
Community Leader
Mega Contributor

Re: Starting the rebuild process!


@Ldennis wrote:
Yes, I'm seeing the drop on CK. I also monitor my Experian but it hasn't had the Verizon drop off yet. On CK it listed that account as the only change. I haven't applied for anything new. No new collections, and still 100% payment history. I see no reason why it would drop like that.

Vantage scores are really not used for lending. So, that score drop is completely irrelevant. Credit Karma is good for monitoring your reports, but not much else. 

Basically, they add age of negative towards AAoA. So, when negative is removed, score drops because AAoA is lowered, when it should not have been counted in a first place. It's a crazy concept. 

Fico models (which are used in lending) do not behave like that. 

 

If you're curious about vantage scoring and fico scoring, there are plenty of threads in General Credit and Scoring forum

 

If you want to know at least one of your Fico scores (EX Fico 8) sign up for Discover scorecard. It's free, you dont have to have discover card and it will give you EX score every 30 days. 

 

You have nothing to worry about. 

Message 7 of 7
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