Medical Collections Effect (monthly updates)

[Anonymous]

When I started reading this forum about 19 months ago, I saw it being mentioned to pay the medical collections if they are updating monthly because it is depressing your score, and making it so the collection never ages. I didn't really understand that because mine update monthly, but I am still happy with my score (obviously constantly striving for a higher score), but in the meantime I feel like my score was decent and I didn't think the collections updating were harming me that bad. So I didn't think that was something that was relevant in my situation, but I just recently got the experian creditworks premium, and I now have access to the simulator.

I decided to test it out to see things that could possibly help and completely paying off my student loans gives me 20 point. (that is not that many?) I wasn't really interested in any of the options but I saw "pay all your bills on time" which I do, (except for the medical collections) and when I clicked on it, I was given 20 points...? I don't understand where those points are coming from, I kept seeing it said the collections need to age otherwise your score will always be brought down, but they are aging? I am at 1y and 10m since negative on EX and TU, and 2y and 8m on EQ.

[Anonymous]

Let me add on to this. What would be worse, continuously updating monthly and the status remaining unchanged, or paying and the status being updated?

[Anonymous]

Paying them and having it updated because it shows you handled past debt

[Anonymous]

Once you pay them they stop updating after the final update to show $0 balance. Then they can begin to age. The more they age, the less they affect your score. It is definitely better to pay them so they stop reporting every month. When they are doing that, it essentially refreshes the debt to look new to the FICO algorithm.

[Anonymous]

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@Anonymous wrote:
Once you pay them they stop updating after the final update to show $0 balance. Then they can begin to age. The more they age, the less they affect your score. It is definitely better to pay them so they stop reporting every month. When they are doing that, it essentially refreshes the debt to look new to the FICO algorithm.

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That is where I am confused though, I need further explanation on that if you can do so. The way I always thought it was is you get the negative and it starts aging immediately. On experian it always shows that as well, it says time since last negative (which is still going up), so I thought that meant it was aging? So what aging are you referring to, that will begin once it stops updating?

*side note, say I was to pay this, what happens to the time since negative clock? I know the status is going to update, which will result in a huge drop, but does that make it so the time since last negative gets reset?

[Anonymous]

Paying it won't affect the DOFD. It'll come off your report 7 yrs from that first delinquency.
Not paying it will allow it to continually update in the sense that it'll still continue to impact your score. Once settled it stops updating and won't impact your score more than it already has. Your scores will start recovering but regardless it'll still fall off the report 7 yrs from first delinquency

[Anonymous]

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@Anonymous wrote:
Paying it won't affect the DOFD. It'll come off your report 7 yrs from that first delinquency.
Not paying it will allow it to continually update in the sense that it'll still continue to impact your score. Once settled it stops updating and won't impact your score more than it already has. Your scores will start recovering but regardless it'll still fall off the report 7 yrs from first delinquency

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That doesn't answer my question unfortunately, I might try and think of a way to reword what I wrote, but at the same time I might not. (this might simply be a question I don't get an answer to) From my perspective, when I read what I asked it makes sense, I don't know the answer to my question so I wouldn't be able to answer it if someone else asked, but the question make sense to me. For the record my question has nothing to do with the dofd, I understand from several people on here, that date never changes. Thanks for trying to answer my question though, hopefully someone understands my question and can answer it, if not, no big deal.

Just so it is clear to anyone who might know the answer to my question it is  right here.

The way I always thought it was is you get the negative and it starts aging immediately. On experian it always shows that as well, it says time since last negative (which is still going up), so I thought that meant it was aging? So what aging are you referring to, that will begin once it stops updating?

[Anonymous]

Ok well hopefully someone else can help you answer your question better. But to give you an example:

I had Verizon cable go into collection. It first became delinquent Dec 2014. It sat in Verizon internal collections for years finally was taken over by collection agency and placed on my report Jan 2018. I finally settled it in Dec 2018. It shows on my experian and transunion only. On experian it shows time since last negative 1 yr. which happens to correlate with my late student loan payment. So paying the collection didn't move my time from last negative to just a few months ago.

[Anonymous]

It is aging in a calendar sense yes, once it hits your report. It is moving toward that dropoff date in the future. What we mean by aging isn’t in a physical passage-of-time sense necessarily. When a CA continually updates reporting of the derog, it refreshes its impact on your score. If it cost you 50 points when it hit, and was then paid off, its negative effect on your score would start to diminish as time moves on. You’d gradually start to recover points over the coming years.

If the derog isn’t paid, and the CA is updating every month, effectively they’re telling the bureaus “yep, outstanding balance, not paid” and this update makes the derog “feel” as new as the day it hit your report, in terms of its effect on your score. If you lost 50 points when it was added, the next month it would suppress your score for that full 50 points. The next month, updated by CA again, it would appear again to be a fresh derog and still suppress your score for that full 50 points, and so forth for as long as you leave it unpaid. This isn’t a cumulative 50 points per month loss, it’s just the full 50 point loss remaining in effect because of the fresh reporting of the derog.

However, once you pay it, the CA changes the report to “paid”, and then no longer reports each month to the bureaus. This is the score-effect aging we are referring to. Maybe that 50 point hit lasts 6 months, and then in month 7 you gain back a couple points of the 50 that were lost. Month 12 comes along and a couple more points reappear. This goes on until the derog is gone from your file, at which point you will gain back any remaining missing points from its effect. That is the aging we are trying to describe.

[Anonymous]

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@Anonymous wrote:
It is aging in a calendar sense yes, once it hits your report. It is moving toward that dropoff date in the future. What we mean by aging isn’t in a physical passage-of-time sense necessarily. When a CA continually updates reporting of the derog, it refreshes its impact on your score. If it cost you 50 points when it hit, and was then paid off, its negative effect on your score would start to diminish as time moves on. You’d gradually start to recover points over the coming years.

If the derog isn’t paid, and the CA is updating every month, effectively they’re telling the bureaus “yep, outstanding balance, not paid” and this update makes the derog “feel” as new as the day it hit your report, in terms of its effect on your score. If you lost 50 points when it was added, the next month it would suppress your score for that full 50 points. The next month, updated by CA again, it would appear again to be a fresh derog and still suppress your score for that full 50 points, and so forth for as long as you leave it unpaid. This isn’t a cumulative 50 points per month loss, it’s just the full 50 point loss remaining in effect because of the fresh reporting of the derog.

However, once you pay it, the CA changes the report to “paid”, and then no longer reports each month to the bureaus. This is the score-effect aging we are referring to. Maybe that 50 point hit lasts 6 months, and then in month 7 you gain back a couple points of the 50 that were lost. Month 12 comes along and a couple more points reappear. This goes on until the derog is gone from your file, at which point you will gain back any remaining missing points from its effect. That is the aging we are trying to describe.

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That answered my question perfectly. I really need to get these paid then if that is the case, I can see why I would gain 20 points because I have 11 updating 1 to 2 times a month. (yes some of them update twice a month)