I don't think I can follow the advice "not" to pay off old debt - need advice

[Anonymous]

I met with a mortgage counselor today. I think I'm in good shape to go fha or conventional in 3 months. Which way I choose depends on my credit score in three months. I'd rather not go fha due to my self-employment status.

I read over and over that paying off old debt will update the date and it will show as a newer "ding" to your credit. Am I the only one that has collection agencies updating monthly on my collection accounts? That status doesn't change, the amount doesn't change but it just shows they updated it. I've been told over and over not to pay a collection that is two years old because it will show new activity and update. Yet these collections updated in January. They have been "updating" my credit file every month. Is this why I'm having so much trouble getting anywhere with my score?

Considering these monthly updates, what harm is it to me to pay them? They are going to update again in March, so why not pay it so it's not updated in April? Is anyone else running into this situation? I'm only looking at $500 or so in old debt (all two+ years old). Every single one is updating monthly.

I'm done trying to PFD. I only have a few months to go before I want to attempt the mortgage. I tried PFD route and must be dealing with companies other than those mentioned on here. I got nowhere with multiple letters. I just want these paid so there's no more updating.

Advice?

Message Edited by mxnuy1 on 02-25-2008 02:23 PM

[MidnightVoice]

I believe some mortgage lenders REQUIRE you to pay off all collections

[Anonymous]

.....WELL SCRATCH THAT AS I JUST READ WHAT PFD STANDS FOR...LOVE THESE ACRONYMS. LOL.

Let me give you a suggestion that has worked for may of our mortgage broker clients with potential borrowers in your same situation.

This is a common, illegal practice implemented by many collection agencies to make that account impact your scores more than they should be.

The DLA being current is what is having the biggest impact.

Contact the collection companies that are reporting on your file. Speak to the representatives there to see what they would be willing to accept as payment. Write that number down! Remember that the agents you are dealing with are mainly paid commission on what is collected so many times they "say" what they need to to get you to pay.

Ask if they would provide what is known as a "Letter of Deletion" if the account were paid in full, as it sounds like you are willing to do that anyways.

If the representative states that they cannot do this or they claim that it is illegal for them to do this just remind them that the reporting practices they are currently using to report this debt is the true illegal activity. BUT if they say they will do this, have them fax you a letter on their letterhead stating that upon a payment of $###.## they will remove the reporting of this account on your credit file. It needs to have contact person from that company, phone, partial account numbers that match what is on your credit file.

Wait to get this letter before sending payment!

After receipt of the letter, send funds via certified mail, with confirmation signature required.

Now you have all that is needed to dispute the item yourself if the collection agency doesn't follow through with their original letter.

Good luck with your situation and I hope this helps.
 

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mxnuy1 wrote:
I met with a mortgage counselor today. I think I'm in good shape to go fha or conventional in 3 months. Which way I choose depends on my credit score in three months. I'd rather not go fha due to my self-employment status.

I read over and over that paying off old debt will update the date and it will show as a newer "ding" to your credit. Am I the only one that has collection agencies updating monthly on my collection accounts? That status doesn't change, the amount doesn't change but it just shows they updated it. I've been told over and over not to pay a collection that is two years old because it will show new activity and update. Yet these collections updated in January. They have been "updating" my credit file every month. Is this why I'm having so much trouble getting anywhere with my score?

Considering these monthly updates, what harm is it to me to pay them? They are going to update again in March, so why not pay it so it's not updated in April? Is anyone else running into this situation? I'm only looking at $500 or so in old debt (all two+ years old). Every single one is updating monthly.

I'm done trying to PFD. I only have a few months to go before I want to attempt the mortgage. I tried PFD route and must be dealing with companies other than those mentioned on here. I got nowhere with multiple letters. I just want these paid so there's no more updating.

Advice?

Message Edited by mxnuy1 on 02-25-2008 02:23 PM

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Message Edited by soalsrfr on 02-25-2008 02:43 PM

Message Edited by soalsrfr on 02-25-2008 02:53 PM

[Anonymous]

It was my mortgage counselor that actually told me not to pay off anything 2+ years old. I don't have any debts any more recent than 2+ years. I just added up my collections. I have four collections on my TU credit report and the total owed is $427.

These companies will not accept my PFD requests. I've tried several times. They won't budge. In fact, I think they started updating my accounts with the credit bureaus when they received my PFD. Honestly, these were all dormant until I sent them PFD requests. Maybe I should have just left them alone.

It was stated that this is illegal? How? Do I have any recourse? Also, when I dispute an account with TU, EX or EQ and they verify and come back and make no changes, can that also update the date? I'm seeing that too. So basically I could have the same amount of collection accounts as another, but because mine are updated on my reports, my score is possibly much lower and I may have to pay higher interest for the same loan as someone with the same collection/debt? What kind of fiasco is this credit scoring system anyway? Isn't this discrimination? I'm just so frustrated. Now I think I know why my TU score hasn't gone up one single point in almost a year. Even though my credit cards all report as paid on time and 5% or less utilization, the constant updating of these collections is reversing any gain I might have made. ??

I have one more question. Can a collection company delete an old collection from my reports when I asked for verification, make a change to the name of the company that I owe (just a slight enough change so it appears to be a new collection) and then report it as a new collection? I need to know what to do, as I have a company that did that. This was a company that I dealt with many times to get a PFD. In fact, they even refused to verify my debt when I sent the request for verification letter. They told me that they were going to update my report with a note that "customer refuses to pay." The debt is for $172 and it's updated as recent as last month. Date sent to collection was 8/2006. This is one of those "screaming" collection companies - unprofessional jerks who refuse to even listen.

But in regards to my first post, considering these are already all updated as recent, it's not going to hurt my score anymore to pay them, is it?

[Anonymous]

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@Anonymous wrote:

This is a common, illegal practice implemented by many collection agencies to make that account impact your scores more than they should be.

What kind of activity is allowed to change the "date updated" on one's credit report for a collection account that is 2-4 years old? If this is illegal, could I possibly use that as leverage in a new PFD letter? I'm having a hard time understanding how this could be illegal, as mine are all updating. Every single one of them. Is there some type of regulation I could quote? I don't want to call anyone. I would like to deal with them only in writing.

No wonder I'm getting nowhere. I sit and read about everyone's success and credit scores going up. I'm doing the same things, but getting nowhere. I suppose having 4 collections re-dinging my account every month has just killed me scorewise.

But again, if paying these accounts won't do any more damage than is already done, I'll have the checks in the mail this week. I just want this in the past.

Message Edited by mxnuy1 on 02-25-2008 04:22 PM

[Anonymous]

Pay off old debt, that shows lenders that you are responsible.  It will report the day you paid it off, but it will continue to show the ORIGINAL DATE the collection was reported, meaning  thats how old the actual collection is.

I wrote 2 letters to the agency that I had my one collection on, they sent me a confirmation letter of deletion off my report and 2 weeks later it was final!  My score jumped 41 points!  I suggest you go for that.  Write and call and do some more writing!

[Anonymous]

Honestly, I should have just done that 7 months ago instead of wasting time on these PFDs. I'd have had 7 months less of updating on my reports and much less of a headache and probably a higher score.

I'm going to pay them off and hope a few Goodwill letters will work.

When my mortgage consultant told me not to pay them, she said because it would update the accounts and they would be newer and hurt my score. I didn't know at the time of the conversation that was the case. That is what made me go look at the reports and notice they were already updating on a regular basis.

Message Edited by mxnuy1 on 02-25-2008 04:32 PM