collections question

[Anonymous]

I have 11 old collections on my report(ALL THE SAME COMPANY IC SYSTEMS), half of which will drop this summer, the rest early next year. The total amount for all is less than $1000. I also have utilization of 95% right now, which I will pay down to 1 or 2% next month. The rest of my report is great, all cards paid on time always. I am wondering how much impact the collections have, as I am hoping to have a decent score after the cards are paid off, but am worried it will still be poor due to the collections. Any ideas?

[Anonymous]

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@Anonymous wrote:

I have 11 old collections on my report(ALL THE SAME COMPANY IC SYSTEMS), half of which will drop this summer, the rest early next year. The total amount for all is less than $1000. I also have utilization of 95% right now, which I will pay down to 1 or 2% next month. The rest of my report is great, all cards paid on time always. I am wondering how much impact the collections have, as I am hoping to have a decent score after the cards are paid off, but am worried it will still be poor due to the collections. Any ideas?

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IMO good chances you will see an improvement in scores once you pay down the UTIL. The collections are still playing a big major part of the negatives holding your scores back which IMO once they fall off will give you another increase depending on how you are bucketed at the time. 

[Anonymous]

Thank you. Does the age of the collection matter? Also, I read that the ones under $100 do not affect the score. Is this true? If so, only 5 of the 11 are hurting me and they are all around 6 years old or more.

[Anonymous]

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@Anonymous wrote:

Thank you. Does the age of the collection matter? Also, I read that the ones under $100 do not affect the score. Is this true? If so, only 5 of the 11 are hurting me and they are all around 6 years old or more.

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The collections under $100 are supposedly not suppose to hurt your scores any longer. Since this is new to Credit Reporting I am unsure of how it does or doesn't impact your scores and or which scoring models are used to determine it.

As far as how old they are others say it is suppose to have less of an impact as time goes on, but in my own experience once the last collection that was removed from my Credit Reports I had an increase of just over 80 points, can't remember the exact number, and this was after letting it fall off after 7.5 years. So it is hard for me to agree that it has less of an impact because of how old it is. I am sure every one's situation is different so YMMV.

[RobertEG]

The effect of the drop of a CA from your CR on your score depends as much, if not more, on what remains.

If other major derogs remain in your credit file, then drop off of one CA would not move you into a "clean" credit file, and its impact probably wont be that much.

I think your biggest improvement will come when the last major derog CA drops.

CRAs use the normal drop off dates set forth in FCRA 605(a) to determine CR "drop off" dates in your CR.  But those dates are not absolute.

That relates to their normal inclsuion in your CR, which a CRA assumes as being the case unless a request for your CR is under one of the exemptions set forth in FCRA 605(b).

Those exemptions pertain to requests for your CR that involve a credit or life insurance transaction involving a prinicpal amount of $150,000 or more, or are related to an employment check for a job having an annual salary of $75,000 or more.

What this means in English is, that while things seem to "drop" from your normal CR, they are still in your credit file.  A creditor can, under the circumstances set forth above (such as most mortgage loans), request and get a CR based on your entire credit file, in disregqrd of any of the "drop off" date provisions of FCRA 605(a).

While this wont impact your credit scoring, it might raise some questions on the part of the potential creditor on seeing an old, unpaid collection in your CR.

All is not about just FICO scoring.

[MarineVietVet]

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@Anonymous wrote:

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The collections under $100 are supposedly not suppose to hurt your scores any longer. Since this is new to Credit Reporting I am unsure of how it does or doesn't impact your scores and or which scoring models are used to determine it.

As far as how old they are others say it is suppose to have less of an impact as time goes on, but in my own experience once the last collection that was removed from my Credit Reports I had an increase of just over 80 points, can't remember the exact number, and this was after letting it fall off after 7.5 years. So it is hard for me to agree that it has less of an impact because of how old it is. I am sure every one's situation is different so YMMV.

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This is true under the new FICO08 but I know of no lender who has yet started using it.

If someone knows a lender who is using FICO08 please let us know.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".