5 year old collection account- still hurting?

[Anonymous]

I have a collection account on my report with a DOFD of 02/2003.   Anybody have any idea about how many points this collection is still costing me?

[RobertEG]

From all that FairIsaac has stated about their algorithm, it appears that a collection is scored about the same as a major derog (e.g., a 90 day late), which decay very slowlly, and even after five years is substantial.  I guesstimate it is still around at least  10 pts.

Message Edited by RobertEG on 04-20-2008 06:49 PM

[MidnightVoice]

my 6.5 year old collection was worth 50 points

[RobertEG]

WOW Midnight!  That is rough! With payment history accounting for 35% of 850, or a total of 298 points on total FICO, one derog after five years costing -50 points is serious!  If that is a fact, then does this lead to the conclusion that a collection is significantly more deterimental than a prior major derog on a CC?

[MidnightVoice]

It was my only derog. The 50 points is the average from the three CRs it dropped off.

[haulingthescoreup]

The higher the score, the worse it hurts. If it's your last or only collection, its removal will probably also move you into a new score bucket. I think that both these factors were in play with MV.

Other members with lower scores and much shorter histories have seen a lower score change.

[Anonymous]

From the beginning of March to the beginning of this month, my last collection fell off my EQ report and my FICO score went from 694 to 779. I was really surprized at how much of an impact that one thing had on my FICO score. I thought that as items got older they were supposed to have less of an impact. Guess I was wrong.

Message Edited by Greenbean on 04-20-2008 09:11 PM

[RobertEG]

Thanks for the info, all.  It appears that collections are much more devastating than I had presumed.

My assumption that they were equivalent to a late payment major derog was apparently underestimated.....I see bumps much bigger than CC late  pay derogs going on and off.

Interestiing, and informative.

Message Edited by RobertEG on 04-20-2008 10:06 PM

[Anonymous]

Not necessarily.

Generally, the more tradelines you have, the less any single mark helps or hurts you.

FICO scoring also trends toward the mean. This means that if you start out at 477, you're far enough below average that you'll get to 577 fairly quickly. 677 will take longer, and 777 probably three or four years.

The same works in reverse. If you were sitting pretty at 822, and you get hit with a collection, you'll drop like a stone into the low 700s. OTOH, if you were already at 564, you'll probably just lose 20 to 30 points or so for a new derog like that.

So under certain circumstances, yes, an old collection could retard a score that much. I would think people with thin but otherwise unblemished credit histories would be most vulnerable to that.

[RobertEG]

Thanks, hauling and new world. for your comments..  great observations, as usual.

I am always amazed at what I throw out on the forum, and what comes back.

And what i continue to learn from you all each day.

I throw out swine, and it usually comes back as stellar pearls!

You all are great..  and i always enjoy the enlightenment.

..... oh, yeah, and sometimes your lucid disagreements!  LOL!