FICO 9 PIF vs PFL

[Anonymous]

Hello!
This is my first post. I’ll get right to it:
In FICO 9, if you pay off the collection, the score goes up a lot because they reward paying off collection, unlike FICO 8.
My question is, if I settle for FULL balance compared to settle for LESS, is there going to be differences in the credit score? I
Know they can go and manually look, I don’t care about that. I’m talking pure credit score. Is there going to be differences in score in FICO 9 if I settle for less compared to settle for full?
I have a 50% offer from one collector but I don’t want to do it if it won’t change my score compared to PIF.
Does the FICO 9 equation actually read PIF and PFL and know the differences?
Please help!

[FireMedic1]

Welcome. I did some research so I'll know how to answer next time. I did find this. "Newer credit scoring model FICO 9, ignore paid or settled collections." But it wont change anything in FICO 8.

[Anonymous]

Thanks for the reply. I do know that FICO 9 rewards paying off collection, unlike FICO 8. The important detail I need to know is, are PAID IN FULL treated the same as PAID FOR LESS (like if I take the 50% discount). I really need to know this fast, I need a few more points in my FICO 9 score to get a SBA loan. My FICO 8 qualifies, but this institution uses FICO 9 which I have a lower score in.

On a side note, I settled with LVNV and they report the discounted amount as BALANCE on my Report! Frustrating!

[FicoGuy2019]

Zero balance collections are ignored.

The FICO 9 score will ignore any collections that have a zero balance. The FICO press release states that any “paid” collections will be ignored. Additionally, collections that have been settled will also be ignored. According to the FICO press release, all collections with a zero balance will be ignored. For some consumers, this acts as an incentive to settle or pay all collections.

Collections remain on credit report.

Collections which currently have a zero balance are ignored by the new FICO 9 formula. However, ignored collections will remain on the credit report until the seven-year limitation is reached. Although the new scoring formula will ignore the collections, lenders may not. In most cases, lenders will continue to notice any consumer debt that has reached collections. Moreover, lenders may continue to hold consumers accountable and deny credit. 

[Anonymous]

Hi guys.  Could you provide references (with links) that establish that collections that are settled (typically for much less than the full amount) are ignored by FICO 9?

You are likely right.  It's just that when I did a cursory look last year, the references I found used the language "paid in full", which usually does not include a settlement for less than the full amount.  Here is an example of the language I am talking about:

https://blog.myfico.com/fico-score-9-whats-the-difference/

Paid Collections. This latest score version handles paid collections differently than before by disregarding any collection situations that have been paid off in full by the consumer.

[Anonymous]

PS.  I realize that the intention of the early statements by FICO might have been to mean "paid to zero."  I.e. they might have been trying to distinguish a $500 collection that has been paid to $0 (even if the consumer only paid $200) from a collection that still has a positive balance.

It would just be nice to see some definite documentation that this is what they meant and how indeed FICO 9 works.

[SouthJamaica]

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@Anonymous wrote:
Hello!
This is my first post. I’ll get right to it:
In FICO 9, if you pay off the collection, the score goes up a lot because they reward paying off collection, unlike FICO 8.
My question is, if I settle for FULL balance compared to settle for LESS, is there going to be differences in the credit score? I
Know they can go and manually look, I don’t care about that. I’m talking pure credit score. Is there going to be differences in score in FICO 9 if I settle for less compared to settle for full?
I have a 50% offer from one collector but I don’t want to do it if it won’t change my score compared to PIF.
Does the FICO 9 equation actually read PIF and PFL and know the differences?
Please help!

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Whenever you pay them less than full amount there's always danger of it being reported as a long term negative, such as a chargeoff. Much safer to pay in full.

[FireMedic1]

Just from my post. This includes medical, non-medical and collections where a settlement was taken. As long as the collection shows a zero balance, it will not be factored into the score.

https://businesscreditreports.com/facts-you-need-to-know-about-the-new-fico-score-9/