Paying a collection agency

[Anonymous]

I read on MSN's "My Money" section that it could actually hurt your score to pay old debts that have been sold to collection agencies. The website states that it can possibly lower your credit score to "settle" on an amount that has already been charged off and claimed as a profit loss to the original issuing creditor. Is this true? While going through my divorce, I lost my job and could not pay my creditors. Obviously, taking care of my children (food,shelter,clothing) was the only thing I could afford because I was not even receiving child support at that time. Now that I have gotten back up on my feet, I have repaid most of my accounts but at the "settlement" amount, not the original amount owed. Was this smart or should I have just left the accounts unpaid? My original creditors won't speak to me or take a payment from me since the accounts have been "charged off" and sold to collection agencies. Any suggestions? Thanks~Single mom of two children!!!

[Anonymous]

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jolo7403 wrote:

I read on MSN's "My Money" section that it could actually hurt your score to pay old debts that have been sold to collection agencies. The website states that it can possibly lower your credit score to "settle" on an amount that has already been charged off and claimed as a profit loss to the original issuing creditor. Is this true? While going through my divorce, I lost my job and could not pay my creditors. Obviously, taking care of my children (food,shelter,clothing) was the only thing I could afford because I was not even receiving child support at that time. Now that I have gotten back up on my feet, I have repaid most of my accounts but at the "settlement" amount, not the original amount owed. Was this smart or should I have just left the accounts unpaid? My original creditors won't speak to me or take a payment from me since the accounts have been "charged off" and sold to collection agencies. Any suggestions? Thanks~Single mom of two children!!!

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The settled for less than the amount owed tells creditors when they read your report that you atempted to make good on the debts but did not pay all you owe.  Generally you cannot have accurate info removed from your credit report.

When MSN mentions payig old debts can hurt your score, that's when you enter into agreements and make the accoutn actively start re reporting, I ahve paid off collections, never saw them hurt my score but they sure didn't help until they were fully removed.

[Anonymous]

Paying old accounts in collections does nothing good for your credit score--whether you pay in full or settle for less. PFD (Pay For Delete) does considerable good.

[Anonymous]

Does PFD (Pay for Delete) mean I will pay if they delete? My friend told me to tell them that if they will send something in writing stating that they will remove it from my credit report, I will then pay in full. Should I do this?

[Anonymous]

jolo7403,

Yes, PFD means getting something in writing from the creditor or collector that they promise to delete and you promise to pay. Just paying it will NOT get it deleted from your credit report, and in fact paying it won't improve your credit score at all just because it's paid.

It depends upon what they promise. This issues gets a LOT of discussion over on creditinfocenter, and there are plenty of examples of folks who've gotten burned by a weasel clause, usually from collectors, where they appear to promise to delete but manage to keep it on your reports anyway.

[Anonymous]

i have a few bad items on my credit for medical bills. i have offered to pay them if they was to take it off of my report. they basically laughed and hung up on me. ( no kidding ) the 2 bills add up to less then $2000. should i pay or is there any other action i can do to get this off my credit?

[Tuscani]

Be persistent! Any company that places a derog can certainly remove it!

I harassed a company for six months before they grew tired of my and agreed to delete.

Also try planetfeedback.com.

[Anonymous]

My experience has been that collection agencies are quite bratty when it comes to PFD. They would rather rub your nose in your past mistakes and come out with nothing than make a wise business decision to mutual benefit and take full payment in exchange for removing a debt from your credit report.

So my response is, hey, I can be stubborn myself. No delete, no pay. I told each customer service rep I spoke with that if at any time their agency wishes to pull its head out of its rear end and do business, I'm available, but until then they're not getting something for nothing from me.

[Anonymous]

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@Anonymous wrote:

i have a few bad items on my credit for medical bills. i have offered to pay them if they was to take it off of my report. they basically laughed and hung up on me. ( no kidding ) the 2 bills add up to less then $2000. should i pay or is there any other action i can do to get this off my credit?

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For medical collections where you haven't yet paid the collection agency anything and you do have the ability to pay, there is a way to force a deletion. This is possible because of the Fair Medical Billing Act which guarantees you the right to pay the OC for medical bills (no matter how old) and the HIPAA laws which don't allow OC to verify information with collection agencies once there is no valid business purpose. Once you have paid the original doctor's office, the doctor's office has no business divulging any information to the CA. This only works if you follow the process exactly. I used it to delete one of my collections.

[Edited to remove two links that are prohibited on the FICO Forums.]

[Anonymous]

As Brammy stated earlier it doesn't seem to impact until it falls off the report. However, if the debt is old see if the creditor even has proof of the debt.. Just call and state you would like proof or verification of the debt. If they can't produce it they must remove it. Also, get it in writing  when they agree to delete it. I have done it a few times with accounts with balances over 800, 2000, and 3000. It was a blessing then I used money for debts that was legite and paying down revolving credit which is weighed heavily in fico scoring. Also, if you are trying to get something financed it looks good that you made the effort to pay. Sounds like you should try to keep money for yourself, concentrate on staying caught up and pay more than min and with time after you complete the collection accounts your score will eventually go up with aging.