Will paying a 6 year old collection restart the clock & a couple more questions

[txgal73]

Hi all, 

A few questions:

• I have a 6 year old collection that is $150. I haven't paid it all these years, as it was my understanding that it restarted the clock and reports like it's a new collection. Is this true? We'll need to apply for another mortgage in November, so now it must be paid. What should I expect?

• Also, we had mortgage lates in 2014/early 2015. We've had perfect payment history since. How much will this affect a new mortgage loan? We're doing 20% down and scores are mid to upper 700s.

• Should I contact the original creditor or collection agency to do this? Specifically for a pay to delete.

[Anonymous]

When you say your scores, are you referring specifcally to your mortgage scores?

[txgal73]

Any really, but definitely mortgage.

[txgal73]

Hi all, 

My original post disappeared, so I'm reposting. 

A few questions:

• I have a 6 year old collection that is $150. It was a medical bill from a local radiologist. It's now with Credit Systems.  I haven't paid it all these years, as it was my understanding that it restarted the clock and reports like it's a new collection. Is this true? We'll need to apply for another mortgage in November, so now it must be paid. What should I expect?

• Also, we had mortgage lates in 2014/early 2015. We've had perfect payment history since. How much will this affect a new mortgage loan? We're doing 20% down and scores are mid to upper 700s.

• Should I contact the original creditor or collection agency to do this? Specifically for a pay to delete.

[chiefone4u]

---

@txgal73 wrote:

Hi all, 

My original post disappeared, so I'm reposting. 

A few questions:

• I have a 6 year old collection that is $150. I haven't paid it all these years, as it was my understanding that it restarted the clock and reports like it's a new collection. Is this true? We'll need to apply for another mortgage in November, so now it must be paid. What should I expect?

• Also, we had mortgage lates in 2014/early 2015. We've had perfect payment history since. How much will this affect a new mortgage loan? We're doing 20% down and scores are mid to upper 700s.

• Should I contact the original creditor or collection agency to do this? Specifically for a pay to delete.

---

@txgal73 You'll get a more tailored answer if you provide some extra details. 

Collection: Original creditor and current collection Agency -- this will allow members with personal experience to chime in with best way to get good results clearing the debt.

A Pay For Delete (PFD) is your best option, some collection Agencies do this without asking other's refuse. If you are unable to PFD, when the account reports paid it will ding your scores as FICO looks at it as a new late.

I don't see your lates causing to much hassle because of age of lates. If they were 90+ day lates it could cause problems though.  I'd be prepared regardless to explain the lates and steps you've taken to prevent future lates.

Might not hurt to try a goodwill campaign to have the mortgage lates removed, though November doesn't offer much time for even a willing lender to be able to remove them.

You might talk with the bank you plan on getting a loan with if your unable to get a PFD, as they may allow the loan to go through without payment,  or as payment being made as part of Escrow so the debt is paid and doesn't effect your scores.

Best of luck going forward! 

[OmarGB9]

Paying it won't restart the reporting clock, but it *may* cause your score to dip if the account hasn't been updating monthly because FICO will see it as a "fresh" derogatory after it updates to zero balance. Is it possible to wait another year for it to drop off before apping for the mortgage?

[txgal73]

Thank you! i edited my inital post.

It says "status date: 9/29/20", so maybe I'd be ok. With a PTD, can they promise to delete and then not do it?

The lates were 30 and 60, but we didn't get any 90s.

The mortgage company that we have lates with sold us in 2017. Have you heard of creditors agreeing to GW when you are no longer a customer?

[txgal73]

Our house is pending, so unless it falls through, no.

[UncleB]

---

@txgal73 wrote:

Hi all, 

My original post disappeared, so I'm reposting. 

Hi @txgal73, your original post was quarantined due to the numerous edits.  I've restored it to the forum, and have merged it with your second thread. 

I don't think you'll have the problem again, but if you do please reach-out to a moderator before reposting to prevent duplicate threads.

--UB

[RobertEG]

As for the question about whether payments will "restart the clock", it depends upon what you are referring to.

There are two periods running.  The first is the time from initial delinquency until the debt is paid or settled, which then terminates the final period of overall delinquency, and the second is the credit report exclusion period, which determines when the CRA must exclude their reported collection from your credit report.

The period for credit report exlusion is fixed by statute (FCRA 605(c)) as being no later than 7 years plus 180 days from the date of initial delinquency with the original creditor.   That period is based only on the date of first delinquency (DOFD), and is not "reset"based on any payment or non=payment of the debt, period.

However, the period of reported overall delinquency is extended each and every time that the collection reports an update to the CRA, as it will have an unpaid, and thus continued delinquency, status.

Just as with monthly delinquencies, extension of the period of repported delinquency affects you scoring, and thus from that perspective, will "reset" the scoring impact of the collection.

By paying, you termiante any further reporting of continued delinquency status, and thus any further extension of its negative scoring impact.