Collection Anniversary Date and Score Improvement

[Anonymous]

Okay, please help me set the record straight. I have a CA on my CR with the following dates on EQ.

Date Reported :    04/10/2009

Date Assigned :    05/27/208

DOFD             :    09/01/2007

Balance Date   :   04/10/2009

Status Date     :    04/10/2009

Last Paid Date :   09/30/2008

The short story is that the account was first delinquent on September 1st 2007. The CA reported the account on May 27th, 2008 and I sent a dispute to CRA around the end of March 2009. The account came back verified from  EQ on April 10th, 2009. 

  My question is this. Base on the above information, which of the dates is used in determining that the CA is over 1 year old, when I will possibly start seeing my CS going up due to aging of the CA. 

[nothingman02]

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@Anonymous wrote:

Okay, please help me set the record straight. I have a CA on my CR with the following dates on EQ.

Date Reported :    04/10/2009

Date Assigned :    05/27/208

DOFD             :    09/01/2007

Balance Date   :   04/10/2009

Status Date     :    04/10/2009

Last Paid Date :   09/30/2008

The short story is that the account was first delinquent on September 1st 2007. The CA reported the account on May 27th, 2008 and I sent a dispute to CRA around the end of March 2009. The account came back verified from  EQ on April 10th, 2009. 

  My question is this. Base on the above information, which of the dates is used in determining that the CA is over 1 year old, when I will possibly start seeing my CS going up due to aging of the CA. 

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End of this month would be a 1 year anniversary. 

[Anonymous]

  Thanks for the reply. I have read on several post that disputing a CA result in score drop due to change in date. I also read that FICO 08 is modified such that paying a collection account is longer penalized like the previous silly versions that does that.

  The problem here is that most lenders are yet to adopt the FICO 08, so the silly penalty continues. I have no clue why Fair Isaac can not just forced the lenders to continue to use the modified version FICO 08 which is more realistic to the current financial climate. Imagine a $30 library fines getting you a collection that destroys your reputation for 7 years. I just don't understand. 

 My believe is that they need to change the rule and the way FICO penalizes defaulters base on the amount owed and if a CA is paid, it should be drop from the credit report no longer than 2 years from the payment date. Once paid, it should also have less effect that an unpaid collection. The rule as it stand now does not encourage paying an account that is already in collection and reporting on your CR.

[nothingman02]

Hmm...Im afraid that IS true actually.

Disputing in itself would not result in a score drop with a CA a/c. But Once the CA updates and reports, it will cause a ding. FICO will look at it as a recent baddie unfortunately. Hence its advised to leave the baddies that you cant resolve alone. 

[nothingman02]

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@Anonymous wrote:

Date Reported :    04/10/2009

The CA reported the account on May 27th, 2008 and I sent a dispute to CRA around the end of March 2009. 

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Im sorry I overlooked the first date.

The above date is what would cause a ding to your score as it would look like a recent baddie but you will get them back. It happens to everybody so I would say just relax. Really, the last thing you want to do while repairing credit is to worry about scores. 

[RobertEG]

I am not sure of what you anticipate the significance of the CA account being over one year old to matter much?

A CA reporting is a major derog.  Its FICO impact looks primarily at its presence as a CA.  CAs dont update account history.

I would not anticipate any significant FICO change at all based on a CA going over one year from its date of reporting.  CA reportng does not age.   It is there or not there.

The original OC delinqeuencies age, but are separate derogs under the OC account.  CA reporting does not age.

[Anonymous]

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@nothingman02 wrote:

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@Anonymous wrote:

Date Reported :    04/10/2009

The CA reported the account on May 27th, 2008 and I sent a dispute to CRA around the end of March 2009. 

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Im sorry I overlooked the first date.

The above date is what would cause a ding to your score as it would look like a recent baddie but you will get them back. It happens to everybody so I would say just relax. Really, the last thing you want to do while repairing credit is to worry about scores. 

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Are you saying that     Date Reported :    04/10/2009   will now reset the anniversary date of the collection?

I'm confuse. This FICO scoring is a mess.

[Anonymous]

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@RobertEG wrote:

I am not sure of what you anticipate the significance of the CA account being over one year old to matter much?

A CA reporting is a major derog.  Its FICO impact looks primarily at its presence as a CA.  CAs dont update account history.

I would not anticipate any significant FICO change at all based on a CA going over one year from its date of reporting.  CA reporting does not age.   It is there or not there.

The original OC delinquencies age, but are separate derogs under the OC account.  CA reporting does not age.

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So if a CA does not age, then why do people FICO scores improve even with a BK on their credit file. I check the FICO score estimator using my data and it predict a jump from 655 - 705 to 680- 730 as soon as my CA past the 1 year mark. All other things being equal.

The last score from my TU was 642 with a 33% UT. I now have <10% UT and I should be within the ballpark of 655-705 as predicted by the FICO score estimator.

  Take a look at the comment from myFICO report below  for my TU report and see the red bolded statement.

You have a recent collection on your credit report. Your most recent collection occured
11 Months agoVirtually no FICO High Achievers [?] have a collection listed on their credit report.

The presence of a collection [?] is a powerful predictor of future payment risk. If this is valid, paying off the collection will not remove it from your credit report. The fact that it occurred is still predictive of future payment risk and will be considered by your FICO score. However, as this item agesand falls off of your credit report, its impact on your score will gradually decrease. Most collections stay on your report for no more than seven years.

Message Edited by scrambler on 05-13-2009 07:49 AM

Message Edited by scrambler on 05-13-2009 07:49 AM

[nothingman02]

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@RobertEG wrote:

I am not sure of what you anticipate the significance of the CA account being over one year old to matter much?

A CA reporting is a major derog.  Its FICO impact looks primarily at its presence as a CA.  CAs dont update account history.

I would not anticipate any significant FICO change at all based on a CA going over one year from its date of reporting.  CA reportng does not age.   It is there or not there.

The original OC delinqeuencies age, but are separate derogs under the OC account.  CA reporting does not age.

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I haven't studied how the FICO scoring buckets work so I am not sure. But I do believe that CA a/cs also age.A CA a/c from 6-7 yrs ago would not score the same as a CA a/c from say, last month.

Agreed that CA a/cs do not have payment history. But CAs usually try and report every month and sometimes continue to do so even after the a/c is PIF(dont know why they do that). And I think this makes a difference to FICO scores as I believe one of the scoring buckets factors in 'recent collections'. 

So, FICO does score recent collections differently. Having said that, you do raise a point. How does FICO determine that its a recent collection? 

If its with the 'date opened' then monthly updating by the CA should not matter. 

But if its the 'date updated', then the monthly reporting should matter.

I just pulled my TU FICO and I have a CA a/c reporting/ updating every month as I havent paid it. But FICO says that my most recent collection occured 5 months ago. That was when the collection a/c was first opened or first reported.

So perhaps, we are both partially right.

CA a/c DO AGE, but monthly reporting DOES NOT make it look like a recent collection to FICO. I hope this will be verified by other members/mods.

But if tthis is the indeed the case, then scrambler, you are ok. That is, your CA a/c would be 1 year old and not 1 month.

Message Edited by nothingman02 on 05-13-2009 04:05 PM

[Anonymous]

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@nothingman02 wrote:

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@RobertEG wrote:

I am not sure of what you anticipate the significance of the CA account being over one year old to matter much?

A CA reporting is a major derog.  Its FICO impact looks primarily at its presence as a CA.  CAs don't update account history.

I would not anticipate any significant FICO change at all based on a CA going over one year from its date of reporting.  CA reportng does not age.   It is there or not there.

The original OC delinqeuencies age, but are separate derogs under the OC account.  CA reporting does not age.

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I haven't studied how the FICO scoring buckets work so I am not sure. But I do believe that CA a/cs also age.A CA a/c from 6-7 yrs ago would not score the same as a CA a/c from say, last month.

Agreed that CA a/cs do not have payment history. But CAs usually try and report every month and sometimes continue to do so even after the a/c is PIF(don't know why they do that). And I think this makes a difference to FICO scores as I believe one of the scoring buckets factors in 'recent collections'. 

So, FICO does score recent collections differently. Having said that, you do raise a point. How does FICO determine that its a recent collection? 

If its with the 'date opened' then monthly updating by the CA should not matter. 

But if its the 'date updated', then the monthly reporting should matter.

I just pulled my TU FICO and I have a CA a/c reporting/ updating every month as I havent paid it. But FICO says that my most recent collection occured 5 months ago. That was when the collection a/c was first opened or first reported.

So perhaps, we are both partially right.

CA a/c DO AGE, but monthly reporting DOES NOT make it look like a recent collection to FICO. I hope this will be verified by other members/mods.

But if tthis is the indeed the case, then scrambler, you are ok. That is, your CA a/c would be 1 year old and not 1 month.

Message Edited by nothingman02 on 05-13-2009 04:05 PM

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Well, it's quite obvious that CA a/c do age and I guess the scoring bucket for collection have to be divided into 3, viz:

(1)  < 1 year old     --> Recent Collection

(2)  between 1year to 3 years old  

(3) > 3 years old

The effect on your report will decrease even further as the CA a/c ages within the bucket before it eventually falls off. I'm basing my assumption on those questions posed on FICO score estimator. Fair Isaac algorithm might have finer division that that, but my guess is that the above 3 buckets might be the broader divisions.

nothingman02,

  How much did your CA a/c dropped your FICO scores? I'm  curious to know how CA a/c  affect different category of people if you don't mind stating your AAoA and the age of your oldest account.