Pay off Collections or Credit?

[Anonymous]

I have been disputing three collections for two years now due to a bad roommate. The amounts total about $3700. What will raise my FICO more?:

1. Paying off the $3700 and having a paid collection, or
2. Paying off $3700 on my credit card balance of $6800.

Thanks in advance for any help on this.

[haulingthescoreup]

Hi, Craig, welcome to the forums! Simply paying off the collections won't help your score. If you can PFD them (pay for delete), it should help your score if they are recent, although strange things can happen. Certainly, it will help the overall health of your credit history to not have collections showing on your report, and lenders generally look at your reports as well as at scores.

What is the credit limit on the card with the $6800 balance? If it is around $7500 or less, you are technically maxed out, and paying it down to $3750 or so (50% ) will help a lot. If you have a really high limit on the card, it will probably have less impact.

Sorry --don't really have enough info (current FICO scores, other balances, other baddies, age of credit history, and on and on) to tell you more than that, and even then, it's always guessing.

[Anonymous]

Thanks for your reply. I am new to my FICO so I apologize for not knowing what PFD is! Sounds like I can pay to have them removed. Actually, I'm interested in that, who provides this service?

Also, is it true that a friend who has an 800+ FICO can take a $50K cash loan with me as co-signature, pay it off over 6 months and boost my score?

Urban legend or real?

Thanks again.

[haulingthescoreup]

Sorry, check out the Common Abbreviations thread up at the top of this forum. Credit Scoring 101 is also up there and is your survival guide, and Frequently Requested Threads has examples of different types of letters, etc.

The person who does the work is you! It involves doing some research in those threads up above, and some time writing letters, but it amazes me how many people come here after they tried to get someone else to fix their credit, and it wound up even worse.

Finally, what you are describing with your friend is called "piggybacking." It started out with spouses being authorized users on one another's cards, and then kids going AU on their parents' cards, and then it just went completely out of control. It is now so bad that the scoring system is being revised to eliminate the benefit to the AU. So even if it helped you out in the first month or so, once FICO 08 (the new scoring system) kicks in, the party's over. It is actually going to hurt a lot of people who did this in good faith, for instance, older housewives who were AU's on their husbands' cards. (This would include me.) And of course, it affects others as well.

Depending on where you're starting from, you shouldn't need to do that. And frankly, it involves a lot of risk for people to do this --it might be one thing for family, but not so for friends or strangers.

[Anonymous]

Hi Craig, here are some threads that will help you. The first has  links for abbrevs and freq.requested threads.

You need to know what the DOFD and DOLA mean...these are the important dates. They tell you when a creditor can file a lawsuit and when it should drop from your report.

http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&thread.id=38534

The differance between CRTP and SOL

http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&thread.id=17466

simple SOL

http://www.bankrate.com/brm/news/cc/20040116b2.asp?caret=8

Remember there are certain steps that should be taken before paying any collection!!!

A DV is sent CMRRR  before a PFD.....because they must prove that the debt is yours and the info. is correct.....they have 30 days in order to answer a DV and then they have to stop reporting to all CRAs.

If they stop reporting you can get it deleted from your CR. So then no PFD is needed as you do not owe the debt!