FICO score did not go up after debt removal

[Anonymous]

Thanks in advance for any insight. I've been trying to qualify for a VA home loan, but I had a $33,000 credit card debt in collections standing in my way. I was assured that if this debt were to be removed, I would almost definitely be pre-approved for the loan.

I was successful in getting the collections agency to remove this debt from my credit reports based on the fact that my credit card had been used fraudulently by an old co-worker. However, this removal has had little to no affect on my FICO scores.

The consultant  I've been dealing with at the lending agency said he's never seen anything like this before. I cut my reported debt in collections from about $50,000 to $20,000 with the bulk of remaining debt attributed to medical bills. Can anyone please explain why my FICO score did not improve with the removal of this $33,000 debt?

Thanks

[Aahz]

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@Anonymous wrote:

Thanks in advance for any insight. I've been trying to qualify for a VA home loan, but I had a $33,000 credit card debt in collections standing in my way. I was assured that if this debt were to be removed, I would almost definitely be pre-approved for the loan.

I was successful in getting the collections agency to remove this debt from my credit reports based on the fact that my credit card had been used fraudulently by an old co-worker. However, this removal has had little to no affect on my FICO scores.

The consultant  I've been dealing with at the lending agency said he's never seen anything like this before. I cut my reported debt in collections from about $50,000 to $20,000 with the bulk of remaining debt attributed to medical bills. Can anyone please explain why my FICO score did not improve with the removal of this $33,000 debt?

Thanks

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Most likely it's not the dollar value of bad tradelines that's holding down your score, but the number of bad tradelines.  You removed one bad tradeline, but how many remain?

EDIT: and what were your scores before and after the removal?

[elim]

"Removed Debt"?

Does that mean there is no sign of the old collection accounts on your reports?  Or did you just pay them off?

It would be a good idea to list your CC Balances/Limits (both open and closed) here to get help raising your score via utilization.

It would be a good idea to list Negative Items on your CR's to get help cleaning your reports.

[Anonymous]

From what I understand the $33,000 item was completely deleted from my account by the collection agency. I was told that they would inform the reporting agencies, and now this item does not appear on any of my credit reports. I obtained credit reports from all three bureaus dated 12/28/2015, and the $33,000 item no longer appears on any of them.

On 12/25 Experian was 596. Today it is 599 the alert reads: "The balance on one of your accounts has increased by $68"

On 12/24 TransUnion went up 15 points to 623 and the alert reads: "The total balance on all your bankcards has changed. The amount is the sum of all bankcard balances."

On 12/25 EquiFax was 585. On 12/30 it went up 13 points to 598 and the alert reads: "The balance on one of your accounts has increased by $68"

I see no alerts from MyFICO that even acknowledges the deletion of a $33,000 debt. 

I have two credit cards, one secured card with a $550 limit, and another premium card with $1,500. I have paid both of these cards down to $0, but the bankcard company has not reported this yet, so it appears to the CRA's that I have about $800 across these two cards.

I've been working with Lexington Law since May 2015. During this time 19 items have been removed across all three CRAs. I currently have 4 negative items with TransUnion; 7 negative items with EquiFax, and 9 negative items with Experian. Since May, Experian has gone from 561 to 599; TransUnion 595 to 623, and EquiFax 584 to 598.

Thanks again for your replies and your insights.

[Aahz]

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@Anonymous wrote:

From what I understand the $33,000 item was completely deleted from my account by the collection agency. I was told that they would inform the reporting agencies, and now this item does not appear on any of my credit reports. I obtained credit reports from all three bureaus dated 12/28/2015, and the $33,000 item no longer appears on any of them.

On 12/25 Experian was 596. Today it is 599 the alert reads: "The balance on one of your accounts has increased by $68"

On 12/24 TransUnion went up 15 points to 623 and the alert reads: "The total balance on all your bankcards has changed. The amount is the sum of all bankcard balances."

On 12/25 EquiFax was 585. On 12/30 it went up 13 points to 598 and the alert reads: "The balance on one of your accounts has increased by $68"

I see no alerts from MyFICO that even acknowledges the deletion of a $33,000 debt. 

I have two credit cards, one secured card with a $550 limit, and another premium card with $1,500. I have paid both of these cards down to $0, but the bankcard company has not reported this yet, so it appears to the CRA's that I have about $800 across these two cards.

I've been working with Lexington Law since May 2015. During this time 19 items have been removed across all three CRAs. I currently have 4 negative items with TransUnion; 7 negative items with EquiFax, and 9 negative items with Experian. Since May, Experian has gone from 561 to 599; TransUnion 595 to 623, and EquiFax 584 to 598.

Thanks again for your replies and your insights.

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It seems like you are getting exactly the bumps one would expect given the totality of your reports.  Don't expect much more than a few points when your balances report to zero either.

Rebuilding sub-700 scores is very much a marathon, not a sprint.  

Nothing you can do with your current cards is going to give you a decent score as long as you still have all of those negative tradelines reporting.  Just keep on working to clean your reports and try to have patience.  I know it can be frustrating, but the day your last negative tradeline gets deleted you'll see that sweet 50-100 point jump

[Anonymous]

Thank you Aahz. I appreciate your encouragement and your objective point of view.

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@Aahz wrote:

Rebuilding sub-700 scores is very much a marathon, not a sprint.  

Nothing you can do with your current cards is going to give you a decent score as long as you still have all of those negative tradelines reporting.  Just keep on working to clean your reports and try to have patience.  I know it can be frustrating, but the day your last negative tradeline gets deleted you'll see that sweet 50-100 point jump

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[Anonymous]

Don't read too much into it. You may have moved to a different scorecard. Rome wasn't built in a day. Just keep plugging away and the score increases will come.