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Archie



Joined: 09 Nov 2009
Archie's page
Posts: 57



37 Magic Points

Subject: Credit Report Activity
 
Posted on Fri Sep 10, 2010 6:37 pm  

I am getting conflicting information on paying off collections. I have two medical collections on my credit report, one of which is 7 years old (about $450) and one of which is 2 years old (about $500), and a FICO of 620 though I pay my mortgage and HELOC on time and pay my credit card in full every month.

One answer is that if I pay off a collection my score will DROP because I have caused "activity" on an old negative account. The other answer is that paying it off will raise my score.
Archie



Joined: 09 Nov 2009
Archie's page
Posts: 57



37 Magic Points

 
Posted on Fri Sep 10, 2010 6:38 pm  

please note---I did send letters to both collection companies offering to pay in full if they will delete these items, rather than marking them paid. Both NCO and a law firm sent me letters refusing to do so. I used a form letter I found online which includes a statement that I was NOT acknowledging the debt was mine.
cinnamngrl



Joined: 01 Nov 2008
cinnamngrl's page
Posts: 1320



6419 Magic Points

 
Posted on Fri Sep 10, 2010 6:43 pm  

do you have all your credit reports?
what state are you in?
what is the original creditor and the name of the CA?
what is the date of first delinquency? 30 days after last payment


nco is one collection agency.

did you ever send a DV letter?
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andyth



Joined: 03 Oct 2009
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Posts: 48



67 Magic Points

 
Posted on Fri Sep 10, 2010 6:47 pm  

Seven-year rule-
Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. This law is known as the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer's credit report for 7½ years. The clock starts approximately 180 days after the date of first delinquency on the account. To learn when an account will be removed by the credit reporting agencies (TransUnion, Equifax, and Experian and others), add 7½ years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to the seven-year rule. However, if the debt is a tax lien, that can appear for seven years from the date of payment. A bankruptcy will appear for ten years from the date of the final order. Delinquent federal student loans can be reported indefinitely, i.e., for as long as they are delinquent.

Therefore, if you pay the debt now, your credit score will not decrease because the damage was done at the date of first delinquency. Your paying the debt now will lift your score because it will indicate a resolution of the account.
andyth



Joined: 03 Oct 2009
andyth's page
Posts: 48



67 Magic Points

 
Posted on Fri Sep 10, 2010 6:49 pm  

Improving your credit score
As you are inquiring about how to improve your credit score, let me give you some information on how a credit score is calculated. Your credit rating is calculated based on several variables, including:

Payment history
Payment history counts for approximately 35% of your score and is the most heavily weighted factor used in calculating your credit score. Consistently paying your bills on time has a positive influence on your score, while late or missed payments will hurt you in this area. If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts and bankruptcy filings are also taken into consideration when analyzing your payment history.

Total debt and total available credit
This counts for about 30% and weighs how much debt you have compared to the total available credit on your accounts. If all of your accounts are maxed out, you will be considered a poor credit risk, because it appears that you are struggling to pay off the debt you have already incurred. If your account balances are relatively low compared to your available credit, this part of the risk analysis should help your overall credit score.

The score calculation also looks at these two factors independently. Having too much available credit, whether you have used it or not, could hurt your credit score, as statistical studies have shown that people with excessive amounts of available credit are a higher credit risk. Unfortunately, the bureaus do not define exactly what they consider excessive, so best tip is to use credit conservatively and to keep your debt to credit limit ratio low.

Length of positive credit history
This counts for about 15%. The longer you maintain accounts in good standing, the better your score will be. This shows that you are able to make a long-term commitment to a creditor and are consistently responsible about making your payments. If you have accounts with long history (5 or more years) and no missed payments, you should keep these open and paid off.

Mix of types of credit
This counts for approximately 10%. Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact.

The number of new credit applications you have recently completed
This accounts for about 10% of your score. Applying for too much new credit in a short time period makes indicates that you could be credit risk, as you may be desperately trying to keep your head above water. The models make an exception for people who are shopping around for a loan, so if you are simply applying to see who can give you the best rate on a new loan, you need not worry too much about damaging your credit score.
andyth



Joined: 03 Oct 2009
andyth's page
Posts: 48



67 Magic Points

 
Posted on Fri Sep 10, 2010 6:49 pm  

How to improve a credit score
Here are four steps to improve your credit score:

1. Pay off all debts and keep revolving lines below 25% utilization. Do not "max out" any loans or cards.

2. Diversify you credit portfolio. If, for example, you have only a Visa, MasterCard, or Discover card, get a department store credit card or card from a gasoline retailer. Make your payments every month. Leave a small balance every once in a while to show that you are able to handle debt on more than one account.

3. Keep your oldest credit account active. Remember "Length of positive credit history" discussed above.

4. Pull your credit report and contest any inaccurate information so that it can be corrected by the credit bureaus. Go to the Bills.com debt self-help center for sample dispute letters. The credit bureaus must follow the rules set forth by Congress in the Fair Credit Reporting Act (FCRA).
cinnamngrl



Joined: 01 Nov 2008
cinnamngrl's page
Posts: 1320



6419 Magic Points

 
Posted on Fri Sep 10, 2010 10:02 pm  

ok what about my questions?
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Subject: WFvLCYbCnX
 
Posted on Sun Sep 30, 2012 9:06 am  

You can get a secured card.It will take about 2 4 years berofe you can get an unsecured card.Best to wait to keep those inquiries off your credit report.
matzcrorkz
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Subject: SzNPJkQpWKGafwoSb
 
Posted on Wed Aug 06, 2014 5:32 am  

PnBbNK Hey, thanks for the article post.Much thanks again.

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