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Thread: A question about credit and collections

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    Veteran Member Joanna_Kaary's Avatar
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    Default A question about credit and collections

    I am trying to raise my credit score and I know I am in collections for a few different things. When I looked up my credit reports and saw the list of what I'm in collections for, though, I didn't see one of the things I was expecting to see. Does this mean this particular account is not affecting my credit score or showing up when banks and companies check my report? Does this mean I should basically not worry about it and just pay off the ones that ARE showing up?

    Also, when I do get out of collections, will my score make a significant jump? It would just be a nice little bit of extra motivation if I knew it would improve as soon as I paid those things off.

    My score is pretty bad right now, 542, and I think it is only because of all those collections. Based on the things that are showing, I only owe about $2,300 total. I don't have any credit cards (I've only applied for two at various times and got rejected both times based on my score) and I had to get my car from a buy here pay here, so even though I've made every car payment on time that hasn't helped my score. So if anybody knows some other ways to establish good credit I'd really appreciate the advice.

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    Banned Melonie's Avatar
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    Default Re: A question about credit and collections

    ^^^ indeed not every creditor makes reports to the credit bureaus. Thus such a debt may not show up in a quick credit check ... and may not be affecting your credit score. However, it WILL show up if an in-depth financial search is done on your social security number.

    There are a lot of ( closely kept secret ) factors which actually go into the credit score calculation. One is debt to income ratio ... which of course improves as your income increases. Another is 'life' of accounts ( an indirect measure of financial 'stability' ) ... which is hurt by the fact that you don't have an active credit card account. And obviously your 'private' auto loan or rent to own or unconventional auto loan arrangements aren't counted as a 'mainstream' loan.

    First step toward improving your credit is obviously to start paying off your delinquent accounts. The degree to which your credit score will improve once these are paid off is related to whether you actually pay off these delinquent accounts in full ( which will help ), versus 'settling' with the creditor for a reduced payoff amount ( which will hurt ).

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    Senior Member alvida's Avatar
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    Default Re: A question about credit and collections

    Also, have they been calling you? When I worked at Chase, if a customer would call us and was really polite, if they asked 'if i pay for this in full over the phone today can you remove it from my credit report?' we usually did. Thats a win/win because the collector gets to add the balance in full to their quota (this looks really good for them too), and you get the mark taken off your credit which will definitely help!

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    Veteran Member Joanna_Kaary's Avatar
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    Default Re: A question about credit and collections

    Thanks guys! The collectors aren't calling at the moment... one of the companies was a few months ago but I kept ignoring their calls so I think they sort of gave up for the time being. I got the numbers of the companies from the credit report though so I will definitely make sure I call and am all polite and ask about getting it taken off when I'm ready to pay in full.

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    Senior Member alvida's Avatar
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    Default Re: A question about credit and collections

    Quote Originally Posted by Joanna_Kaary View Post
    Thanks guys! The collectors aren't calling at the moment... one of the companies was a few months ago but I kept ignoring their calls so I think they sort of gave up for the time being. I got the numbers of the companies from the credit report though so I will definitely make sure I call and am all polite and ask about getting it taken off when I'm ready to pay in full.
    ^ I wouldnt call until you are ready to pay it in full over the phone. They don't like 'promises' and I wouldn't trust a representative either because some places will say anything just to get a few dollars collected.

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    Banned Melonie's Avatar
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    Default Re: A question about credit and collections

    The collectors aren't calling at the moment... one of the companies was a few months ago but I kept ignoring their calls so I think they sort of gave up for the time being
    While there might be other reasons for doing so, the usual reason that a creditor stops calling is that they are in the process of 'selling' your debt to a third party collections company. In general this makes it more difficult for the debtor to 'clear up' their credit report / financial history. In some cases, for credit reporting purposes, this 'sale' effectively brings down the curtain on the original debt ... which is considered to be in default with a resulting loss and 'write-off' for the original creditor. The debt 'bought' by the third party collections agency, in some cases, can appear as a 'new' debt ... which will also be considered to be in default if a few months pass beyond the time that the original debt was 'sold' to the collections agency without additional payment from the debtor.

    In some cases, the sale of the original debt can also 'start a new clock' in terms of credit reporting. Had the debt been held by the original creditor, after something like 39 months the listing of this debt would 'fall off' the front page of credit reports. But if the debt is 'sold' to a third party at, say, the 24 or 30 month point on the original 'debt clock', in some cases a 'new' debt listing will appear on the front page of credit reports for the debt now owed to the third party which will require another 39 months to 'fall off' the front page.

    Also, coming to terms with a third party collections agency may, in some cases, have little or no effect on the credit reporting status of the debt owed to the original creditor. For example, if there was an original loan for $1000 owed to the original creditor, and that original creditor decided to 'sell' that loan to a third party collections agency for say $400 plus take a $600 'loss' and write-off, if the debtor subsequently makes a $1000 payment to the third party collection agency, none of that $1000 will find it's way back to the original creditor. This is the reason that third party collection agencies are in business in the first place !!! Thus the original creditor would be 'within their rights' to continue reporting the original debt as a defaulted loan with major 'loss', since $600 of the $1000 paid by the debtor actually went towards collection agency profits instead of repayment to the original creditor.

    Thus when trying to clear up old debts now owned by third party collections agencies, it's very important that the debtor ask detailed questions in this regard. Without some active communication and agreement between the third party collections agency and the original creditor to 'clean the slate' entirely, a situation can arise where the full $1000 amount owed has been paid by the debtor to the collections agency, but a report of the original defaulted loan and major 'loss' will still exist. If that happens, it can continue to affect the debtor's creditworthiness for many years to come.
    Last edited by Melonie; 10-20-2012 at 12:42 AM.

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    God/dess Zofia's Avatar
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    Default Re: A question about credit and collections

    Step one - challenge anything on your report that is even slightly questionable.

    Step two - pay, as Mel and others above have suggested, when you are certain it will clear up a debt. Remember, every state has different rules about how old a debt can be before it cannot be enforced. You might want to talk to a lawyer about those rules for your state.

    Step three - get a credit card that reports and pay it off every month. (If you cannot get a regular credit card, Capital One offers a secured card that is a pretty good deal, as those things go.) Remember, cell phone companies, cable companies and utilities almost never report to the credit bureaus unless you default. Do not buy a cell phone because the salesman tells you it will help your credit report. It won't. It can only hurt.

    HTH
    Z

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    Default Re: A question about credit and collections

    ^^I second the Capital One secured card. I got one a while back to try and build current, positive credit and I had to pay a $49 deposit (deposit amount will vary from $49-200 depending on your credit) to get at $200 limit. They report to the credit bureaus as if it was a regular unsecured card, so no one will know the difference. If you pay the card on time monthly, they will offer you a credit increase after enough time has passed. You can also up the limit yourself by adding more to the deposit. Say you want a $200 increase in credit, you put a $200 deposit down to get $200 in credit.

    I track my score online and after about 3 months this card alone made my score jump 12 points! Having a current, good standing card is a good idea. Just be sure to keep it in good standing because they WILL report negative as well if you do not pay on time monthly!

    Here's the link if you want to try it out: http://www.capitalone.com/credit-car...ed-mastercard/

    Also, I challenged E V E R Y T H I N G on my report and was able to have 8 items removed! This made my score jump another 15 points.

    If you want to track your score online you can go to http://www.freecreditscore.com Granted, this only gives you ONE of the credit bureaus numbers, but it's a good estimate of your overall outlook.
    xoxo ~ Sarah




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    Default Re: A question about credit and collections

    You should definitely try Credit Karma! Its a good way to track your progress. I think they use a TransUnion report, but you can check it anytime and it's all for FREE. It will also give you an idea if you will get approved for a card and allow you to see how things will potentially change your credit score with a slider.

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