Collections paid & deleted

[Xtracho]

I recently made a settlement offer to the collection bureau to pay some medical collections. That offer was accepted, paid & the bureau agreed to report the settled accounts to be deleted. Just downloaded my updated reports and they all show that the accounts have been deleted but my FICO score has not moved nor have I received any alerts from myFICO regarding the deletions or any change in my scores. Is there a delay or something like that between deletion of the accounts and FICO updating? Or is it just a pipe dream to expect my scores to increase?

[Anonymous]

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@Xtracho wrote:

I recently made a settlement offer to the collection bureau to pay some medical collections. That offer was accepted, paid & the bureau agreed to report the settled accounts to be deleted. Just downloaded my updated reports and they all show that the accounts have been deleted but my FICO score has not moved nor have I received any alerts from myFICO regarding the deletions or any change in my scores. Is there a delay or something like that between deletion of the accounts and FICO updating? Or is it just a pipe dream to expect my scores to increase?

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Depending on how old the account was you may or may not see a huge score increase. Just be happy that it was deleted from your account. Now if you have not started to build more credit, that would be my next step to increase your file and score. Congratulations on your success!!!!!

[Xtracho]

Thanks. I settled over $4k in collections for less than $2K. That is a big deal and did not mean to diminish its importance. The collections were from medical in 2011 & 2012. I understand the age of the collections has an effect, but shouldn't there be at least some movement, however small it may be? As well as some alerts from myFICO? It's been just less than two weeks since the bureau reported the accounts to be deleted.

[jamie123]

Collections being deleted does not trigger a FICO re-scoring. You have to wait for something else to happen that will trigger a re-scoring like a credit card payment update.

Will you have a clean file once these collections are deleted or will you still have some baddies on your reports?

[Xtracho]

Thanks for the info. Did not realize that. So as I understand, my next credit card payment update will trigger the update to include the deleted collections? The only item remaining is a civil judgment that has been paid & is shown as such on the reports. It has already been figured into my score as I understand it.

[jamie123]

A judgment is considered a major baddie and will probably hold your scores down about 50 to 100 points from where they should be until it drops off your reports. It makes absolutely no difference to your scores whether it is paid or unpaid.

The last major baddie on your reports like a collection, judgement or tax lien is worth the most points because once it falls off it leaves you with a clean file.

Look at the scores in my signature line. Can you guess which 2 CRAs are reporting a tax lien? My EX file doesn't have the tax lien and my score is more than 100 points higher than my EQ and TU scores.

Don't get me wrong, you will probably see a bump in your scores when the collections fall off but it might not be as big as you think. It seems that the upper scoring limit, by having 1 major baddie on your reports, is somewhere around 700 to 740. And that is if the rest of your reports are spotlessly clean with good credit history.

Tell me more about your credit history and I might be able to give you more guidance.

How many credit cards do you have?

How old are your credit cards?

What is your credit utilization as reported to the CRAs? (The percent of available credit that you use.)

Do you have any closed auto loans?

Do you have any open auto loans?

Mortgages?

Installment loans?

Anything else I should know?

Oh...And what are your scores and where did you get them?

[Xtracho]

Thanks for the info again. I do understand that the judgment is a major hit. But it's been on the reports since 2010 & has been paid off since late last year. So it's already been figured into the scores (at least that's what I understand). So the damage from it has already been done. Can't get any worse.

4 credit cards - 3 years, 2 years, 2 years, 6 months age on them. Total credit limit is $6400
Credit utilization is at 65% but paying it down about 10% each month.
1 closed auto loan with a 30 day late from 2011 (I had heart surgery. I know that doesn't matter but that's why)
No open auto loans.
No mortgage
No installment loans

We carry virtually no debt other than credit cards.

We are currently looking to purchase a home within the next couple of months. Feeling out lenders right now. Although the FICO 8 scores are not where they should be, the version that most lenders use is good enough with a mid-score of 670. My DTI is less than 10%.

Scores as of 10/16/2015 reports: FICO 8. EQ: 610 TU: 635 EX: 623

Scores are from myFICO. I just purchased updated credit reports on 10/16.

[jamie123]

Yeah, your best bet is to get your credit card UTI under 30% before apping for a mortgage and better yet would be less than 10%. You will see a score bump with each of those milestones.

The number of cards reporting a balance also matters. You will get your highest scores with 1 card reporting less than 10% of its credit line and all the other cards reporting $0. The closer you can get to this ideal the higher your scores will be. For each card more than 1 that reports a balance you get a score nick so you should use the snowball method of paying off your cards. Pay the minimum on all your cards and take any extra money and apply it to the card with the smallest balance. Once that card is paid off, rinse and repeat.

You need to have 1 card reporting a small balance! If all your cards report $0 your scores will drop! I know it is counter intuitive but that's how it works.