How many points does a collection affect your FICO?

[Anonymous]

We have good credit, and am just recently reading on how to make it go higher. We have 4 paid off small collections reporting on our credit. I thought these were gone because credit karma (fako lol) had us at a 790 score and is showing no reporting collection accounts. These accounts are older, 2014 for all of them. 

I am wondering how much each collection affects scoring? with 4 reporting, if I get them removed, is there a chance for a large jump? I am wondering what I would be looking at score wise if I ask for them to be removed. Thanks! 

[kuku4koco]

Probably enough to get you to or over your 700 pt goal... 

I had a small medical bill removed, worth 20+ pts.  (one bill).  Those add up!

But it also depends on the rest of your credit profile... all things being equal, if those are your only baddies... Good luck with the deletion process!

[Anonymous]

We have nothing else. No late payments, 7 year average account age... low accounts only 3.... newest account was 3.5 years old until I just opened 2 credit cards to up our total accounts because that is what is hurting us. I got a chase freedom and the paper they sent said 701 score. Also got the discover it with our highest limit (6,000)... havent gotten the card yet so not sure the score pulled. Neither of these are reporting yet, so i am hoping for a score jump since our 14 percent utilization will be like 5%. And that will quickly be paid off. I am curious with all these changes what will happen. Even with the 2 inquiries those are the only ones we have. 

[Thomas_Thumb]

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@Anonymouswrote:

We have good credit, and am just recently reading on how to make it go higher. We have 4 paid off small collections reporting on our credit. I thought these were gone because credit karma (fako lol) had us at a 790 score and is showing no reporting collection accounts. These accounts are older, 2014 for all of them. 

I am wondering how much each collection affects scoring? with 4 reporting, if I get them removed, is there a chance for a large jump? I am wondering what I would be looking at score wise if I ask for them to be removed. Thanks! 

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The collections could be costing you 50 to 80 points on Fico 04/Fico 98 and Fico 8 (assuming they are over $100). The Fico 9 version ignores paid collections (they don't count against your score) whereas Fico 8 does count paid collections against you. Fico 04 and Fico 98 count collections on your file against you regardless of amount or paid/unpaid.. One way to "check" is to purchase a 3B report from Fico.

If your Fico 9 scores are significantly higher than Fico 8, it might be because your paid collections are ignored. If the collections fall off your report or are removed, it's a good chance your F8 scores would increase to F9 levels assuming your files are otherwise clean.

[Anonymous]

Thanks! We are squeaky clean aside from the collections. And upon looking again I see the 2 medical are only counted at one for some reason. It was the same procedure and collection agency so that may be why? On experian it says things hurting your credit... Collections, low amount of accounts, and loan balance. Our car loan says weve paid off 60 percent. I am not sure what they like to see there. We only have 3 open accounts reporting as of now. I do have the 2 cards that will be added. I am assuming the inquiries already did their damage since they are showing right? I only have 2 inquiries on each report.

[Thomas_Thumb]

Your inquiries have already been taken into account. However, a low age of youngest account(s) likely is still impacting your score.

Ideal aggregate balance to loan ratio is under 9% thus, the reason statement for your Auto loan.The loan may be worth 35 points to you if optimized. Given your 40% B/L, I suspect the loan currently might be adding 15 to 20 points to your Fico 8 score vs no open loan. [side note: mortgages don't require such a low B/L ratio to realize full score potential based on my observations]

Your lack of accounts is costing you points - hard to say how many. An insufficient age of oldest account and/or a low average age of accounts could be hurting your score as well

[Anonymous]

Oldest account is 14 years, youngest account 3 years. I do have 2 new accounts being added and that will obviously bring down average age but right now it is 7 years. I am hoping a couple months will show a good jump. I sent out some letters for these collections and hoping they can be removed! 

[Anonymous]

Is a collection a late payment? obviously we were late paying it lol but we dont have any late payment on our account. 

[Thomas_Thumb]

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@Anonymouswrote:

Is a collection a late payment? obviously we were late paying it lol but we dont have any late payment on our account. 

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[RobertEG]

"Late payments" refer to monthly delinquencies, and are only established on accounts for which you have an account agreement (i.e., OC accounts).  They mandate the setting of established billing due dates, either via an installment loan agreement which sets pre-agreed payment amounts and dates, or via monthly billing statements on revolving accounts, which set variable due dates and minimum payment amounts based on current debt balances.

The current reporting establishes the current status as either one of delinquency (e.g., 120-late or charge-off) or of good-standing (e.g., pays as agreed), and the payment history profile records historical record of prior monthly account status.

Debt collectors become involved when an account is in default, and the full amount is being sought.

There are no monthly billing due dates set by a debt collector, as you have no account agreement with them, and the CRAs have no codes for debt collectors reporting monthly delinquencies on their collections.

However, FICO does consider the updated reporting by a debt collector as an effective extension of the delinquency period on the debt, and it can affect scoring, but wont post in your payment history profile.