FICO Weirdness - Input Needed

[Felix9]

So I'm looking to refinance my mortgage and I see that I have 717/717/784 for my Credit Scores.  My credit is perfect except for a collection that 1) shouldn't have gone to collection and 2) I shouldn't have been nice and paid the original company the (very sketchy) $199 .  Long painful story, but that's about 4.5 years old and is on the two 717's.  Can a collection for 4.5 years ago for $199 lower my credit score like 70ish points?  Mortgage guy said no way, he's never heard of that.  Everything else being equal it's the only thing that makes sense.

Now the 717/717/784 are for Fico 8, when I look at the Mortgage Fico scores they are lower across the board, probably about 20-30 points.  On there it says I have a Consumer Financial Account my credit, which is surprise surprise, Sheffield Financial for a $2,600 (was $3,700).  I've read that these are bad, which is f'd up cause it's 0% but whatever, FICO is possibly the shadiest company in history and I've accepted that.  The question is for this, if I pay off the $2,600 and close out the account will that help my credit score?  I know these things stay on for 10 years but I'm looking to get my score up now not 5+ years from now. lol

Thanks for any insight you can give.

[jamie123]

Definitely work on getting that collection removed! Removing it from just one of the CRAs has the potential of saving you thousands of dollars on your mortgage. Why does it only have to be removed from one CRA? Because in mortgage lending they only use the middle score, so if one of the two CRAs removes it your middle score will rise.

I would suggest contacting Sheffield Financial and negotiate to have them remove the account once you pay it in full. If they tell you they can't do that, they are lying to you. You need to do this or else it will stay on your reports for 10 years after it is closed. Keep calling until they agree. Be very nice and courteous in these negotiations. Tell them that it is preventing you from buying a house for your family or come up with some other sob story. (Ya know, telling them that you want it removed so you can save money might not go over as well!)

[Anonymous]

Awesome response by Jamie.  The key idea with the finance company account is that you owe them money.  This means you have leverage.  If you pay it off and then begin asking them to delete it, they no longer have any particular reason to help you.  His sob story idea is great and so is his reminder to be gently persistant and courteous.  Eventually you may well get somebody who will be persuaded to do what you ask.

As far as the collection goes, you can continue to ask veteran Jamie for advice on best nuts-and-bolts strategies for removal, but you should also create a separate post in the Rebuilding forum that mentions only the collection and asks for advice.  As you know, you lost the leverage when you paid it, but there may be ways still to do it.

[Felix9]

Yeah I'm going to work on getting the collection off, going to try and call the Radiology company and ask them to have the Collection removed saying it was incorrect or something.  The bill was like a few dollars initially and I wrote a check, but apparently that was never cashed and then they sent it to collections after jacking it up to $199 (cause no collection company is going to to collect on like $3 lol).  So there is some logic to what I'm asking for.

With regards to Sheffield, I called them and they said BB&T never removes removes stuff from credit reports.  I could dispute it, but the woman didn't know what would happen if I did that.  So I need to call back Monday and talk to someone closer to it, she was just a 1st line Customer Service person. I'm not optimistic though, and not sure if paying it to $0 will even help me.

As an aside, this is all pretty f'd up.  Really these people should be using FICO 9 or something, this FICO 4 crap is insane.  Getting penalized for paying 0% because supposedly those companies cater to those with poor credit and give high APR loans?  That's wacked, and it looks like that was taken off of FICO 8 and no doubt FICO 9.  Then FICO 9 ignores this medical stuff.  People gotta pay it forward! :-)  Thanks for the help, I'll move this over to the credit repair section also.

[Anonymous]

Good luck.  Here is a story from my end which my encourage you,

I have a very old Bank of America card which I could find no decent use for, since my newer rewards cards had made it obsolete.  Then I heard about the the BOA Better Balance Rewards card, which sounded perfect for me to do a product change to.  The official policy at BOA (as of this summer) is not to permit PCs to the BBR card.   So what I did is wrote up a little script for myself and I called every other day in the morning.  Put the phone on speaker and just made coffee and so on.  Got an answer of No each time, at which point I said thanks in a firendly way and ended the call..  But after 2-3 weeks I finally got somebody who said Sure No Problem.

So the point is, if you make up a little plan, make it painless to call, expect a No, and then be persistent, you can often find somebody who will do what you want without getting bent out of shape yourself.

Unless you get other advice here, I would NOT dispute the account.  Disputes are ways of saying that there is something false on that record.  The record is in fact correct, though I agree it is unfortunate that FICO interprets it negatively.

[jamie123]

Yes, yes and yes!

CreditGuyInDixie is spot on! If you do as he is suggesting you will get it removed. You need to tell them that you are prepared to pay the account in full but want their guarantee that they will remove it. Once they agree to your terms, pay it off right then and there using a credit card. Make sure to get the customer service person's name and ID number and have them email you the receipt.

And yeah, you need to visit the rebuilding forum and learn how to do GW (Good Will) letters. The same applies, you have to stay at it. It usually doesn't work on the first attempt. Keep sending letters until you get the results that you want.

[SunriseEarth]

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@Felix9 wrote:

So I'm looking to refinance my mortgage and I see that I have 717/717/784 for my Credit Scores.  My credit is perfect except for a collection that 1) shouldn't have gone to collection and 2) I shouldn't have been nice and paid the original company the (very sketchy) $199 .  Long painful story, but that's about 4.5 years old and is on the two 717's.  Can a collection for 4.5 years ago for $199 lower my credit score like 70ish points?  Mortgage guy said no way, he's never heard of that.  Everything else being equal it's the only thing that makes sense.

Now the 717/717/784 are for Fico 8, when I look at the Mortgage Fico scores they are lower across the board, probably about 20-30 points.  On there it says I have a Consumer Financial Account my credit, which is surprise surprise, Sheffield Financial for a $2,600 (was $3,700).  I've read that these are bad, which is f'd up cause it's 0% but whatever, FICO is possibly the shadiest company in history and I've accepted that.  The question is for this, if I pay off the $2,600 and close out the account will that help my credit score?  I know these things stay on for 10 years but I'm looking to get my score up now not 5+ years from now. lol

Thanks for any insight you can give.

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I'd recommend sending GW letters to get the collection removed from other two CRAs.   Or if you're close to the exclusion date, you could see if the CRAs are willing to do an early exclusion.  

IIRC, most people tend to see a temporary drop from paying off a loan.   Paying it to zero would still keep it on your CRs for ~10 years, and I believe it's the presence of the 'Consumer Financial Account" moreso the fact that it's open that's depressing the scores.   IMHO, your efforts are probably better spent on your collection and getting that removed.  

[Anonymous]

One of your questions was, can a 4.5 yr old collection for $199 lower your score 70+ pts.  Yes it can if it is your only collection.  I have a $150 medical collection from 2010. TU removed it in May. My score went from 668 to 750.  Equifax and Experian still have it on my report and my scores are in the 680-690 range. That collection is the only difference. 

It sounds like you may have another issue but I just wanted to verify that a small, old collection can do a lot of damage to scores.

[Felix9]

So two question, how do I write a GW letter for a Collection that I already paid off?  It's also not on 1 Credit Report but on the other 2, I want to make sure whatever I do that it doesn't end up on the 1 it's not on.  Do I write the GW letter to the original creditor?  Can I just call them directly?

Also yes 100% I have lost..wait for it...wait for it...111 points from a $199 4+ year old collection! LOL  My Credit Score is 843 without it, like come on FICO, **bleep**?

[Felix9]

So I'm going to be heading overseas soand wanted to get a good travel card and came up with the Chase Reserve, prior to applying I thought I'd check my Credit Score to see how I was doing.  Turns out that crap/shady $199 collection finally dropped off and my FICO 8 jumped to Equifax: 841, TransUnion: 835 and Experian: 843.  Just goes to show you how moronic FICO is where a dumb medical bill can devastate your Credit Score like 130 odd points. :-/  Oh wells, it's fixed now.  Better late than never I guess! lol