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What should I beleive...

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What should I beleive...

Before I discovered this forum a couple weeks ago I was under the impression that to get results on improving your credit was to use a credit repair company. Five months ago I signed up for a 12 month package with a well known Credit Repair company that I will not name. I was happy with the results that I have gotten up to this point, they have been able to get 5 items removed from my credit reports, so they say. I pulled all three of my credit reports this past weekend and 2 of the three trems they claimed to have removed are still on one or more of my credit reports. I have come to realize from reading the many threads in this forum that I can make far more progress myself than by using the Credit Repair company who is basicly only asking for Verification/validation of the items on my credit reports.

 

I called the company today to let them know that I would like to cancel my contract with them which they did, the lady was very nice and when she asked me why I wanted to cancel I wanted to be honest with her. I explained to her that I have decided to pay off and or come to a settlement on some of the collections I have on my credit reports. Of course her job is to try and talk me out of canceling and the explanations she gave me I am finding hard to beleive so I thought I would post those statements here to get everyones feedback.

 

Statements:

1.  Settlements on collection accounts can hurt your credit worse than an active collection. A settlement is viewed as being worse than an open collection in the eyes of potential new lenders.

2.  An active collection that has been paid off in full with a zero balance has the same weight in the eyes of the credit bureaus as an active collection account with an outstanding balance.

 

I really find these statements hard to beleive but I am no expert, any info anyone can share.

03/19/19
Experian: 571 | Equifax: 563 | TransUnion: 563

04/06/19
Experian: 591 | Equifax: 566 | TransUnion: 577
14 REPLIES 14
Legendary Contributor

Re: What should I beleive...

The effect of a collection depends upon the effective period of delinquency, as reported to the CRA.

A debt collector is required to report the date of first delinquency to the CRA, and the period of delinquency is then measured by the time from that initial date of delinquency up to last reporting by the debt collector of a current delinquency status.

As with any delinquencies, the longer the actual period of delinquency, the larger the negative scoring impact.

 

The period of delinquency is determined based on the difference between the date of initial delinquency and the last reporting by the debt collector of a continued delinquency status.  If a debt collector is not making updates, then the reported delinquency period is not being updated.  However, as soon as a debt collector makes updated reporting, it extends the effective period of reported delinquency.

 

When you pay a collection, the debt collector is required under FCRA 623(a)(2) to promptly report the update of current status and balance to the CRA, which finalizes the overall period of delinquency up to that final date where the status changes from delinquency to paid or settled. 

 

Thus, if a debt collector has not updated for a long period, then the final update can effect the overall reported period of delinquency of the collection.  However, after that final update, there is no further extension of any delinquency on the debt, so the effect of the collection begins to age in scoring impact........

 

 

Message 2 of 15
Community Leader
Mega Contributor

Re: What should I beleive...


@Bbradford71 wrote:

Before I discovered this forum a couple weeks ago I was under the impression that to get results on improving your credit was to use a credit repair company. Five months ago I signed up for a 12 month package with a well known Credit Repair company that I will not name. I was happy with the results that I have gotten up to this point, they have been able to get 5 items removed from my credit reports, so they say. I pulled all three of my credit reports this past weekend and 2 of the three trems they claimed to have removed are still on one or more of my credit reports. I have come to realize from reading the many threads in this forum that I can make far more progress myself than by using the Credit Repair company who is basicly only asking for Verification/validation of the items on my credit reports.

 

I called the company today to let them know that I would like to cancel my contract with them which they did, the lady was very nice and when she asked me why I wanted to cancel I wanted to be honest with her. I explained to her that I have decided to pay off and or come to a settlement on some of the collections I have on my credit reports. Of course her job is to try and talk me out of canceling and the explanations she gave me I am finding hard to beleive so I thought I would post those statements here to get everyones feedback.

 

Statements:

1.  Settlements on collection accounts can hurt your credit worse than an active collection. A settlement is viewed as being worse than an open collection in the eyes of potential new lenders.

 

Settlement amount is not really all that relevant, it's the derogatory behind it that's hurting in lender's view. 

Paying at least something will always look better than nothing at all. Practical benefits are no more calls, letters, or threats with legal actionThose things dont stop even after it drops off your CR.  

Peace of mind should be worth something. 

 

 

 

2.  An active collection that has been paid off in full with a zero balance has the same weight in the eyes of the credit bureaus as an active collection account with an outstanding balance.

 

An open, unpaid collection "hurts" more because it may update periodically and that hurts every time. 

Once paid, your scores can begin to recover. 

 

I really find these statements hard to beleive but I am no expert, any info anyone can share.


 

EX 759 EQ 774 TU 753


Message 3 of 15
Regular Contributor

Re: What should I beleive...


@RobertEG wrote:

 

Thus, if a debt collector has not updated for a long period, then the final update can effect the overall reported period of delinquency of the collection.  However, after that final update, there is no further extension of any delinquency on the debt, so the effect of the collection begins to age in scoring impact........

 

 


If I have a few collections that have been charged off and are no longer reporting is it best to just not pay or settle on those unless the agency is willing to do a PFD?

03/19/19
Experian: 571 | Equifax: 563 | TransUnion: 563

04/06/19
Experian: 591 | Equifax: 566 | TransUnion: 577
Message 4 of 15
Regular Contributor

Re: What should I beleive...


@Remedios wrote:

@Bbradford71 wrote:

Statements:

1.  Settlements on collection accounts can hurt your credit worse than an active collection. A settlement is viewed as being worse than an open collection in the eyes of potential new lenders.

 

Settlement amount is not really all that relevant, it's the derogatory behind it that's hurting in lender's view. 

Paying at least something will always look better than nothing at all. Practical benefits are no more calls, letters, or threats with legal actionThose things dont stop even after it drops off your CR.  

Peace of mind should be worth something. 

 

2.  An active collection that has been paid off in full with a zero balance has the same weight in the eyes of the credit bureaus as an active collection account with an outstanding balance.

 

An open, unpaid collection "hurts" more because it may update periodically and that hurts every time. 

Once paid, your scores can begin to recover. 

 

 


 


Thank you, that makes sense.

03/19/19
Experian: 571 | Equifax: 563 | TransUnion: 563

04/06/19
Experian: 591 | Equifax: 566 | TransUnion: 577
Message 5 of 15
Frequent Contributor

Re: What should I beleive...

I would do a PFD as long as they are willing to remove from all 3 CB then it will help out as long as you don't drop your Age of accounts but over time that will heal too

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Message 6 of 15
Regular Contributor

Re: What should I beleive...

Yeah what those guys said!!! Smiley Very Happy




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Message 7 of 15
Community Leader
Mega Contributor

Re: What should I beleive...


@Girlzilla88 wrote:

I would do a PFD as long as they are willing to remove from all 3 CB then it will help out as long as you don't drop your Age of accounts but over time that will heal too


 

 

Collection accounts do not contribute to AAoA, so removal of the same has no impact on AAoA. 

 

 

EX 759 EQ 774 TU 753


Message 8 of 15
Frequent Contributor

Re: What should I beleive...

If the account is open and in collection and is removed it will hurt if it is dropped or removed it did for me so I'm going by personal experience not sure if that was a rare unicorn case but it dropped my oldest open account off and so my Age dropped to a crappy less than a year open ....

Starting Score: 537
Current Score: 725
Goal Score: 775


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Message 9 of 15
Established Contributor

Re: What should I beleive...

I thought only closed accounts go to collections? Also my collections update monthly so it only messes with my time since delinquency but it never messed with anything else.






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Message 10 of 15
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