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To pay or not to pay?

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To pay or not to pay?

I have the opportunity to pay a collection that just reported In Jan from a previous property management company I WAS disputing the charges with but they sent me to collections anyway. If I pay the collection by the end of the month the collection agency has agreed to completely remove their data from my credit report. The weird thing is that I went to look at Credit Karma to see how much the collection dropped my score and it said my score went up by 1 point when that collection acct reported. It left me scratching my head. So now I’m worried I will pay this acct in full to have it removed and it isn’t going to help my score. Has anyone ever seen this before??
Message 1 of 19
18 REPLIES 18
Valued Contributor

Re: To pay or not to pay?

You again?? Smiley Wink 

 

Okay so...  #1 Rule in Credit -- ignore scores provided by Credit Karma.   They are not FICO scores, they are of the Vantage 3 model and respond completely different to various changes to / aspects of credit data than the FICO model.  Your Vantage scores can be drastically higher or lower than FICO (my VS3 scores are almost 80 points below my FICO scores).   The overwhelming majority of lenders use FICO for credit decisions so you need to obtain and monitor your FICO 8 scores.   You can start with a trial from either Experian.com (their CreditWorks option will give you scores for all 3 bureaus) or you can do a 7-day trial with CreditCheckTotal.com.    I highly suggest you invest in a monthly monitoring service so you can track your progress. 

 

You can also obtain a free Experian FICO 8 from https://www.discover.com/free-credit-score/    You do not have to be a cardholder.  

 

Also - you are seriously over-thinking this -- your priority should be getting all negative data off of your reports -- why would you prefer a creditor see that you defaulted at one point??  A collection account is way worse than just having a lower credit score -- creditors would rather take someone with a lower score and clean report over someone with a 20-point higher score and a dirty report.  Anyways...

 

Most people see a significant increase with the removal of negative information -- especially when it's the only negative item reporting.  If one has more than one negative on their reports, they may not see a much of a score increase - if any at all - because the other negatives are still weighing their scores down.  Rarely does one see a score drop -- and this is usually due to FICO scorecard reassignment -- something you have no control over and is bound to happen at some point anyway (and it's ultimately a good thing).  Nonetheless, removal of negative accunt data is a crucial step in rebuilding as having a clean report is most important -- trust me, the high scores will follow with time -- and will come faster on a clean report than a dirty one.    


What else is on your reports (other negatives, open accounts, closed accounts, loans, etc.)? 

 

Don't forget to go get your FICO scores. 

 

Personal Aphorism:
"Forget What You Feel, Remember What You Deserve"


Starting FICO 8s | 09/06/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 11/2019: EX 761 ✦ EQ 734 ✦ TU 757
Current FICO 9s | 11/2019: EX 768 ✦ EQ 775 ✦ TU 766
Highest FICO-8 Ever | 10/2018: 780 [on dirty report]

2019 Goal Score | 760s


My AAOA: 2.9 years not incl. AU / 3.0 years incl. AU
My AoOA: 6.9 years not incl. AU / 8.9 years incl. AU
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Report Status: Clean

Tending my Garden til 6/2020


Without patience, we will learn less in life. We will see less. We will feel less. We will hear less. Ironically, rush and more usually mean less.
Message 2 of 19
Member

Re: To pay or not to pay?

It’s the only negative on my report. I was more curious because rather than drop $1900 up front to have it removed entirely I also have the option to make payments but it would remain on the report and show as paid in full. I didn’t find the collection acct until I checked my score because we are going to buy a veh. I want to bump my score a bit to get a better interest rate so now my choices are pay this to have it deleted or pay down the balances on a couple of my card to lower my utilization. Trying to determine what will have the biggest score boost in the shorter time.
Message 3 of 19
Valued Contributor

Re: To pay or not to pay?

Ah... I see.   What's your current ulization? Are you near maxed out territory? Over 30%? 

 

Personally, if it were me, and my util was less than 30%,  I'd get rid of the collection -- especially since you're apping for a loan.   Util higher than 30% but less than 50%... ehh... I'd probably still get rid of the collection and try my best to explain away the high util to negotiate a lower interest rate.  You can't really explain away a default...  even if it's paid in full .. and it will continue hold back your scores until it falls off - even with the lowest util. 

   

But I get your conundrum...   Just in the long run, removing the collection will be better for your overall credit health.   Utilization has no memory,  you can always pay it down - get the additional score boost from lowered util - and refinance the auto.   

 

Let's wait and see if anyone else weighs in on this...  get some other thoughts / opinions.   

Personal Aphorism:
"Forget What You Feel, Remember What You Deserve"


Starting FICO 8s | 09/06/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 11/2019: EX 761 ✦ EQ 734 ✦ TU 757
Current FICO 9s | 11/2019: EX 768 ✦ EQ 775 ✦ TU 766
Highest FICO-8 Ever | 10/2018: 780 [on dirty report]

2019 Goal Score | 760s


My AAOA: 2.9 years not incl. AU / 3.0 years incl. AU
My AoOA: 6.9 years not incl. AU / 8.9 years incl. AU
Inquiries: EX 0/6 | 4/12 ✦ EQ 0/6 | 5/12 ✦ TU 0/6 | 1/12
Report Status: Clean

Tending my Garden til 6/2020


Without patience, we will learn less in life. We will see less. We will feel less. We will hear less. Ironically, rush and more usually mean less.
Message 4 of 19
Member

Re: To pay or not to pay?

Utilization is at 60%. Generally Christmas time I use my credit cards with the intentions of using my Feb merit bonus to pay back down the balances. Imagine my surprise when this year I have a choice to make lol

Now! I did use CreditXpert score simulator that is estimating a 42 point increase by having this collection deleted, but I know many people say simulators can be grossly inaccurate.
Message 5 of 19
Valued Contributor

Re: To pay or not to pay?

 

 


@Nbenner wrote:
Imagine my surprise when this year I have a choice to make lol


Isn't this always how things work...? LoL.

 

True, simulators are not very reliable,  but 42 (or more) points for the removal of the only negative is certainly not unheard of.   I don't know, as I said, I'd remove the collection because of its long term benefits, and worry about util & interest rates later, but that's me.   When is this collection due to fall of your reports based on the 7 year reporting statute?? 

 

Are you, by any chance, able to pay some of the utilization down -- to say, less than 48%, and still pay off the collection?   

 

Personal Aphorism:
"Forget What You Feel, Remember What You Deserve"


Starting FICO 8s | 09/06/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 11/2019: EX 761 ✦ EQ 734 ✦ TU 757
Current FICO 9s | 11/2019: EX 768 ✦ EQ 775 ✦ TU 766
Highest FICO-8 Ever | 10/2018: 780 [on dirty report]

2019 Goal Score | 760s


My AAOA: 2.9 years not incl. AU / 3.0 years incl. AU
My AoOA: 6.9 years not incl. AU / 8.9 years incl. AU
Inquiries: EX 0/6 | 4/12 ✦ EQ 0/6 | 5/12 ✦ TU 0/6 | 1/12
Report Status: Clean

Tending my Garden til 6/2020


Without patience, we will learn less in life. We will see less. We will feel less. We will hear less. Ironically, rush and more usually mean less.
Message 6 of 19
Member

Re: To pay or not to pay?

It just began reporting Jan 21 so Im assuming 7 years from that date??
Message 7 of 19
Valued Contributor

Re: To pay or not to pay?

It's 7 years past the Date of First Delinquency (DOFD). The DOFD is the month / year the account first became delinquent (with the original creditor) and was never brought current-- so whenever you became 30 days late and made no additional payments.

I'm guessing your DOFD was maybe 2-4 months ago... so just consider that if you don't take the offer, this collection will haunt you for a long while - unless you're able to convince them to delete some time in the future after you complete the payments - which is also a possibility.
Personal Aphorism:
"Forget What You Feel, Remember What You Deserve"


Starting FICO 8s | 09/06/2017: EX 641 ✦ EQ 634 ✦ TU 647
Current FICO 8s | 11/2019: EX 761 ✦ EQ 734 ✦ TU 757
Current FICO 9s | 11/2019: EX 768 ✦ EQ 775 ✦ TU 766
Highest FICO-8 Ever | 10/2018: 780 [on dirty report]

2019 Goal Score | 760s


My AAOA: 2.9 years not incl. AU / 3.0 years incl. AU
My AoOA: 6.9 years not incl. AU / 8.9 years incl. AU
Inquiries: EX 0/6 | 4/12 ✦ EQ 0/6 | 5/12 ✦ TU 0/6 | 1/12
Report Status: Clean

Tending my Garden til 6/2020


Without patience, we will learn less in life. We will see less. We will feel less. We will hear less. Ironically, rush and more usually mean less.
Message 8 of 19
Established Contributor

Re: To pay or not to pay?

+1 to everything tmr has said!


Starting Score: Nov 3, 2018: EX 597 TU 599 EQ 616
Current Score: November 1, 2019: EX 691 TU 703 EQ 704
Goal Score: Dec 31, 2019: EX 700 TU 700 EQ 700

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Message 9 of 19
Senior Contributor

Re: To pay or not to pay?

My personal take - if you only have one tradeline standing between you and a clean file, and you have the ability to get rid of it, I wouldn’t even hesitate. The baddie would get paid off and cleared. As stated above, you can fix UTI anytime just by paying cards down. Wipe the negative off your report, have a clean file, and then pay down your balances and you won’t be dragging that collections anchor around for the next 7 years.


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Message 10 of 19
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