Collections

[Kathy4NU]

I want to make sure I am understanding this correctly.

Is it correctly that regardless if you have one account being reported or 100 it has the same affect on your FICO score?

I had 28 accounts being reported as collections.  All are medical bills.  I am down to 14.  I have had great success with PFD.  On September 9th one collection agency will be removing 5 that I paid off.  Do I really need to have all 28 removed before I see an increase in my score?

[llecs]

No, however the law of diminishing returns comes into play. If you add one CA, then you'll see a very large ding. Add a second, you'll see a ding but much less. Add a 3rd, even less than that, and so on. Add your 100th CA and you probably won't feel a thing. It all depends on how it reports, the age of the baddie, and how many other baddies you have. So, if you have 30 CAs at 6.9 yrs old, then adding a new on 6 yrs of clean history could ding your scores. It's always YMMV.

[Kathy4NU]

Ok, this makes a little more sense.

So after this next weekend I will have 9 collections from 28.  None of the remaining will be paid off.  (Currently I am only paying those that will PFD).  At what point will i start to see an increase in my score?  All are around 18 to 20 months old.  Does the amount of the bill play into the score at all?  (That balances are anywhere from $3000 to $126).

I have one VISA that is reporting for 3 months - in good standing. Keeping my utilization at 7%.  I also have 3 student loans that are in default that I am in my 4th month of rehabilitation.  I am sure these things also play into it. 

Other than the VISA I have been focusing on the collections but have yet to see an increase in my FICO.

[llecs]

For CAs, the amount owed plays no factor at all into scoring. That's why you don't gain points by paying off a CA.

[RobertEG]

It goes back to the fact that, prior to doing the actual scoring, FICO first looks at overall characteristics of your credit file, and places you into a peer group generally referred to on this site as scoring buckets.  The actual algorithm then has different scoring criteria based on the "bucket" it eventually assigns you to.

Having any major derogs, such as monthly delinquencies of 90+, a CO, collection, public record, etc., places you into a "dirty" scoring bucket under payment history.

Thus, a first major derog hits hard, and conversely, until all major derogs are gone, recovery is less.

Until your file becomes "clean" (i.e., void of major derogs), the removal of one or more collections will be less significant.

[Kathy4NU]

I understand.

It is frustrating that I have put so much work into getting the collections removed and have seen zero progress with my score.  I wonder how many people who faced a serious illness has had this happen to them.  Between co-pays and deductibles it is almost impossible to avoid a medical collection.  

Do you think once I get it down to under 5 on my report that I will start to see some points?  I think when I am all done I will have 5 paid medical collections that will be 2 years old.  One particular collection agency has all 5 and will not delete for anything.  They have been a bear to work with.  I have paid through the original creditor (hospital).  THe collection agency has updated my credit file with a lower amount owed.  When I called them they said it was for interest.  It is not a terrible amount. I think I will pay the interest with a disclaimer that I am not admitting to owning or owing the bills than try the HIPPA process.  Has anyone had luck with this?

[llecs]

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@Kathy4NU wrote:

I understand.

It is frustrating that I have put so much work into getting the collections removed and have seen zero progress with my score.  I wonder how many people who faced a serious illness has had this happen to them.  Between co-pays and deductibles it is almost impossible to avoid a medical collection.  

Do you think once I get it down to under 5 on my report that I will start to see some points?  I think when I am all done I will have 5 paid medical collections that will be 2 years old.  One particular collection agency has all 5 and will not delete for anything.  They have been a bear to work with.  I have paid through the original creditor (hospital).  THe collection agency has updated my credit file with a lower amount owed.  When I called them they said it was for interest.  It is not a terrible amount. I think I will pay the interest with a disclaimer that I am not admitting to owning or owing the bills than try the HIPPA process.  Has anyone had luck with this?

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There are quite a few stories in here. DW and I had kiddo #4 w/out health insurance. Now you can plan 9 months out in terms of budgeting, and you can't do that with a sudden illness w/ no medical savings set aside, but I get that there are many who try to dip their hand in the money jar just for one life event. There were two baby docs, the hospital, the nurses' group, the hearing specialist, the anethesiologist (sp?), the pediatrician, DW's doc, fees for the technicians, and so on. Moderate fees here and there add up to a lot in a hurry, and it's easy for a sudden illness, medical event, accident, or whatever to add up to a lot of collections in a hurry. Check out the Rebuilding Your Credit forum and you'll see lots of examples.

I think you'll see some movement at or near 5, and/or when the newest ones start coming off.

Post your question in Rebuilding Your Credit, per the interest and the collecting CA, and you'll get more responses. I can say that with the HIPAA process you do not deal with the CA at all, including not paying them. Payments would go to the OC only. But check out the other board for more info.