Score Impact of Collection Account Being Sold Multiple Times

[CharBAM]

I have a utilities collections account that my husband at the time had opened in my name and did not pay.  I am just discovering it now, and see that it is several years old and has been bought and then sold amongst, from what I can tell, 3 different collections agencies.  Thus, it would be on my credit report, then off for a month or two, then back on under a different agency name.  Does anyone know if my score took a hit each time the same one debt was reported by a different agency? Also, does this reset the "seven year rule"...such that the clock starts over again each time it is newly reported by a new agency?  Finally, as I prioritize which debts to resolve as part of a concerted effort to improve my score - will I see any improvement to my score if I pay it off?  I know that it will not come off my credit report per the 7-year rule - but how does a paid collection help my score...or does it, since the negative item is still on my report? 

[FicoMike0]

If it's not actually your account, challenge it. Your husband opening an account in your name is identity theft. Did you ever pay it? That might be considered acceptance of the account.

[JoeRockhead]

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@CharBAM wrote:

I have a utilities collections account that my husband at the time had opened in my name and did not pay.  I am just discovering it now, and see that it is several years old and has been bought and then sold amongst, from what I can tell, 3 different collections agencies.  Thus, it would be on my credit report, then off for a month or two, then back on under a different agency name.  Does anyone know if my score took a hit each time the same one debt was reported by a different agency? Also, does this reset the "seven year rule"...such that the clock starts over again each time it is newly reported by a new agency?  Finally, as I prioritize which debts to resolve as part of a concerted effort to improve my score - will I see any improvement to my score if I pay it off?  I know that it will not come off my credit report per the 7-year rule - but how does a paid collection help my score...or does it, since the negative item is still on my report? 

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The issue with collections being reported, or updated is that many of the Fico scoring models take recency of the event into consideration so when it gets freshly reported again after no reporting for several months, it's scored as more recent, which drives scores back down. 

A paid collection is usually scored less harshly than an unpaid one except in newer scoring models (like Fico 10) where a collection is a collection, paid or not. One thing that may help is if the collection agency that holds the account offers "pay for delete". This scenario would benefit to your scores the most if it can be removed once paid, or settled. The charge off would remain (but marked zero balance) unless you can get the utility company to do a goodwill removal of the charge off reporting once it's paid.

No matter how many times the account is sold to a different collection agency, it does NOT reset the clock on the 7 years. That clock starts based on the first delinquency that led to the original account being charged off to begin with. 

[AndySoCal]

@CharBAM  One of the first things with a collection account is who owns the debt.  A creditor has two options with a debt that has gone bad.  Option one is to assign the debt to a collection agency. In this scenario the creditor still owns the debt but has outsourced so to speak the collection of the debt. Option two is the creditor can sell the debt to collection agency. In this case the collection agency (the debt buyer) owns the debt. In either scenario only one collection agency should be reporting the debt.  In either scenario you need to talk to the utility  company.  Once that is known  the other two collection agencies need to remove their reporting. Why? Those collection agencies no longer own the debt.If you know this is a valid debt you call or send a letter requesting the information you need.  If the utility company still owns the debt you can pay them if you would like to.The discussion whose name the account should have been opened under is a separate issue.

[Thomas_Thumb]

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@JoeRockhead wrote:

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@CharBAM wrote:

I have a utilities collections account that my husband at the time had opened in my name and did not pay.  I am just discovering it now, and see that it is several years old and has been bought and then sold amongst, from what I can tell, 3 different collections agencies.  Thus, it would be on my credit report, then off for a month or two, then back on under a different agency name.  Does anyone know if my score took a hit each time the same one debt was reported by a different agency? Also, does this reset the "seven year rule"...such that the clock starts over again each time it is newly reported by a new agency?  Finally, as I prioritize which debts to resolve as part of a concerted effort to improve my score - will I see any improvement to my score if I pay it off?

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The issue with collections being reported, or updated is that many of the Fico scoring models take recency of the event into consideration so when it gets freshly reported again after no reporting for several months, it's scored as more recent, which drives scores back down. 

A paid collection is usually scored less harshly than an unpaid one except in newer scoring models (like Fico 10) where a collection is a collection, paid or not. 

No matter how many times the account is sold to a different collection agency, it does NOT reset the clock on the 7 years. That clock starts based on the first delinquency that led to the original account being charged off to begin with. 

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In Fico 8 and earlier models both paid and unpaid collections are treated the same. However, with Fico 8 collections below $100 are ignored in scoring. With Fico 9 all paid collections are ignored but there is no minimum $ for unpaid. Medical collections designated as such are treated differently than other types of collections in F8/9/10.